Thursday, May 29, 2014

Trading Idea: Pioneer Natural Resources (PXD)

Pioneer Natural Resources (PXD) ran up 75% after breaking out from a first stage double bottom base on top of a cup and handle base in May of 2013. The stock broke out of a second stage cup and handle base on May 7th, in volume 121% above average, but did not make any progress. The stock has spent the last three weeks forming a three weeks tight pattern and is on the verge of attempting another breakout today. Volume is running about 50% higher as of mid day.

Fundamentals are strong and are expected to stay strong for the next three years. Sales and earnings growth are seen accelerating to 24% and 27% respectively. The company beat earnings by almost 19% the last quarter and estimate revisions have been significant since. Operating margins have accelerated for five straight quarters and are at the highest point in the last eight quarters.

Potential price target range for the stock is between $336 - 429 (60 - 100%), based on several of our own proprietary indicators and a pe expansion price target from its first stage base.

Full Disclosure: Hold position in stock.

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