Oil Stock Builds Base While Trying To Change Power Market, Focus On Carbon-Free Energy


New Fortress Energy (NFE) is forming a deep cup-with-handle base as this oil stock seeks to change the power market. The Leaderboard stock and IBD 50 member is today’s pick for IBD 50 Stocks To Watch.


The New York-based company seeks to become the world’s No. 1 supplier of carbon-free power by helping customers convert or build gas-fired facilities. Liquefied natural gas is a key component of the business.

Wall Street expects profit to soar 332% in 2022 to $2.03 a share. That’s down in recent weeks but still marks an all-time record for earnings. New Fortress logged its first annual profit, of 47 cents a share, in 2021.

Oil Stock Falls On Earnings Then Stabilizes

New Fortress Energy fell hard on Nov. 8-9 after the company reported earnings. The firm posted Q3 results last month, with EPS of 41 cents, vs. a 5-cent loss in the year-ago period. This was far below Wall Street views. Revenue jumped 140% to $732 million, according to IBD MarketSmith.

The nearly 35% correction from the head of the cup to the toe was deeper than usual for a good cup pattern. The handle also is deeper than normal, at 25%. But at least the oil stock is trying to firm up within the handle. In a setback, it fell below the 50-day line Monday.

Investors should pay attention to the handle, which could become a base of its own with a couple more weeks of consolidation.

The oil stock tried to clear a second-stage consolidation in early June but quickly turned tail. A breakout after that over a 52.47 entry worked much better.

NFE stock has support from its 50-day moving average and is well above its 200-day average. Although its relative strength line dipped slightly over the past couple weeks, it still has a strong RS Rating of 95.

NFE Looks To Break Out Of Slide

NFE stock fell nearly 7% Monday afternoon as energy stocks fell across the board and as the market slid. Oil prices dropped below $80 per barrel Monday, and the Energy Select Sector SPDR ETF (XLE) slid 1.9% in afternoon trading.

The Organization of Petroleum Exporting Countries and its allies agreed Sunday to stick to the existing policy of reducing oil production by 2 million barrels per day.

According to Morgan Stanley, New Fortress is focusing on so-called “Fast LNG” opportunities amid a tightening global gas market. New Fortress has operations in the U.S., the Caribbean, Europe and Latin America.

New Fortress Energy holds the No. 10 spot among its peers in the integrated oil & gas industry group, which is ranked No. 114 out of 197 groups, according to IBD Stock Checkup. NFE is ranked behind top-rated stocks such as BP (BP), Equinor (EQNR), Total Energies (TTE) and Exxon Mobil (XOM).

Follow Michael Molinski on Twitter @IMmolinski


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