APA Corp. is an oil and gas exploration and production company that operates across four distinct jurisdictions, namely, the United States, Egypt's Western Desert, the United Kingdom's North Sea, and offshore Suriname.
While inherently cyclical, APA's balance sheet continues to strengthen and free cash flow generation is expected to improve after this year, supporting the prospect of higher cash returns to investors near term.
Technically, the stock price is moving in an inclining channel pattern (see the red and green parallel trendline on the main chart as well as the insert). This pattern consists of two upward sloping parallel trendlines, one representing higher highs (resistance) and the other representing higher lows (support). The inclining channel is a bullish continuation pattern, indicating that the overall trend is upward.
The stock is trading below its 200-day simple moving average (SMA) of ~$39.50. The price is approaching its 200-day SMA, which indicates a bullish trend.
Our bullish bias is supported by upside price momentum, according to the Moving Average Convergence Divergence (MACD) histogram, and the upwards trajectory of the On-balance Volume (OBV) indicator. The Coppock Curve echoes a similar analysis.
Share Information
| Share code | APA |
|---|---|
| Industry | Energy |
| Market Capital (USD) | 11.69 billion |
| One year total return | 12.75% |
| Return year-to-date | -17.86% |
| Current price (USD) | 37.88 |
| 52 week high (USD) | 50.58 |
| 52 week low (USD) | 30.15 |
| Financial year end | December |
| Closing paragraph | The share price has performed well over the last year but has been under pressure year-to-date. The share price has begun to stage a recovery this month. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 7.68 | 4.47 | 5.55 | 5.22 |
| Growth (%) | -41.82 | 24.31 | -5.96 | |
| Dividend Per Share (USD) | 0.75 | 1.01 | 1.01 | 1.04 |
| Growth (%) | 34.80 | -0.40 | 3.67 | |
| Forward PE (times) | 8.48 | 6.82 | 7.25 | |
| Forward Dividend Yield (%) | 2.67 | 2.66 | 2.66 | |
| Closing paragraph | Earnings are expected to fluctuate in the medium-term due to volatility in oil prices. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
AIG - Take Profit (Close the position) |
HACK - Buy (Continue to hold) |
BLK - Take Profit (Close the position) |
|---|---|---|---|
| Entry | 54.72 | 47.58 | 684.92 |
| Current | 59.37 | 51.56 | 738.93 |
| Movement | 8.5% | 8.4% | 7.9% |
| Summary text | We closed the trade early to lock in profit and reduce portfolio risk. |
The price remains above critical support levels and trade continues above the 200-day simple moving average. Upside momentum, however, has faded.
Our profit target is $55 with a trailing stop-loss of $49.60. Exit the position around 4 August 2023. |
We closed the trade early to lock in profit and reduce portfolio risk. |
| Share Name and position |
FOXF - Buy (Continue to hold) |
JBHT - Buy (Continue to hold) |
HD - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 105.69 | 178.77 | 301.09 |
| Current | 113.54 | 188.17 | 316.76 |
| Movement | 7.4% | 5.3% | 5.2% |
| Summary text |
The stock is consistently achieving higher highs, and higher lows. The price is currently above its 200-day simple moving average. Upside momentum continues to support the bullish trend.
Our profit target is $126 with a trailing stop-loss of $105.30. Exit the position around 6 October 2023. |
The price has formed a symmetrical triangle pattern in the uptrend and trade continues above the 200-day simple moving average. Upward momentum also supports our bullish bias.
Our profit target is $201 with a trailing stop-loss of $179. Exit the position around 6 September 2023. |
The price pattern is indicative of an accumulation phase. Notably, the price is trending above its 200-day simple moving average. The presence of upward momentum reinforces the bullish trend.
Our profit target is $340 with a trailing stop-loss at $302. Exit the position around 15 September 2023. |
