Oil Races to $100 a Barrel, Beat it to the Punch with My Favorite Energy Play
Shah Gilani|February 7, 2022
On Thursday, West Texas Crude (WTI) settled above $90 per barrel for the first time since October 2014.
That’s no surprise to me. I’ve been bullish on it since early last year.
That being said, momentum in oil is getting overbought which means we could see a short-term pullback.
Longer-term though, I still see oil trading up to $100 (and beyond) by mid-summer. Any pullback right now would be like a great opportunity to make a trade on energy companies.
One of my favorite energy trades, right now, is Exxon Mobil Corp (XOM).
On the 1st, the company reported it’s fourth-quarter results, which included GAAP earnings of $8.87 billion. That’s up from a $20.07 billion loss in the same period a year ago.
Exxon also managed to generate $48 billion of cash flow from operating activities, its highest since 2012, and it’s paying down debts. $9 billion in debt was paid during the fourth quarter, bringing the repayment to a total of $20 billion since the start of 2021.
Those are solid numbers and shares jumped as much as 9.63% in last week’s trading.
As I said, I wouldn’t be surprised if we see a short-term pullback in WTI, and that would likely bring shares of XOM back down, before rising again on the back of another move higher in WTI.
If shares of Exxon Mobil Corp (XOM) trade down to $77.00 by February 25, let’s the XOM May 20, 2022 $77.5/$80 Call Spread for $1.10 or less. Plan on exiting for a 100% profit or if shares of XOM close below $72.00.
I’ve also got my eyes on Pinterest Inc. (PINS). On Thursday, the visual discovery social media company reported its fourth-quarter results, too.
PINS non-GAAP net income came in at $339.4 million or $0.49 per share. Last year, it was $294.3 million or $0.43 cents per share. So far, so good.
Revenues for the quarter grew 20% year-over-year to $846.7 million, beating the consensus estimate of $831 million. Even better.
But I have bad news for Pinterest. Its Global Monthly Active Users (MAUs) decreased 6% year over year to 431 million. That’s a problem.
Shares tried to rally in early Friday trading but by midday, the stock had pulled back off its early highs – now it’s sinking lower.
PINS has dropped 73.29% from its February 2021 intraday high of $89.90. I think the stock is going to continue trading lower as the rising-rate narrative takes even more steam out of the tech/social media sector.
If shares of PINS trade up to $28.50 by February 11, 2022, buy the PINS March 18, 2022 $27.5/$25 Put Spread for $1.20 or less. Plan on exiting for a 100% profit or if shares of PINS close above $30.25.