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Is it Time to Add Ultra Petroleum (UPLMQ) Stock to Portfolio?

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On Oct 1, Zacks Investment Research upgraded Ultra Petroleum Corp. to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Oil price has been improving and is hovering near the $50 per barrel price range. The recovery in commodity price was driven by the Organization of the Petroleum Exporting Countries’ (OPEC) decision to cut oil production. The announcement was indeed surprising as the OPEC members – most of whom are major producers – had earlier refused to curb output in order to hold and further grow their market share. Interestingly, had this initiative been taken earlier, crude price might not have tumbled to the multi-year lows and the oil pricing carnage could have been reigned in sooner.

Following a six-hour gathering in Algeria last week, members of the OPEC decided to curtail crude output. Notably, this is the first time since 2008 that the OPEC has decided to lower production to address the issue of supply glut. Also, the OPEC officials have decided to form a committee to determine how much production each country would have to cut. The report on the same will be presented at the group’s next meeting in November.  

In addition, we note a substantial improvement in natural gas price. In fact, the price of natural gas crossed the physiological $3 per Million Btu mark during the second half of September for the first time this year.

The improvement in oil and gas prices is undoubtedly favorable for upstream energy players like Ultra Petroleum that generate cash flows by selling these commodities. The company’s shares gained more than 23% in the last one month.

Moreover, for the current quarter, the Zacks Consensus Estimate for the company has increased to 33 cents from 16 cents over a period of 60 days. For the current year, the Zacks Consensus Estimate for the company has surged from 24 cents to 77 cents.

ULTRA PETRO CP Price and Consensus


Other Stocks to Consider

Players in the energy sector that also warrant a look include NGL Energy Partners LP NGL, Evolution Petroleum Corp. EPM and Helix Energy Solutions Group, Inc. HLX. Both NGL Energy and Evolution Petroleum sport a Zacks Rank #1 (Strong Buy), while Helix Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NGL Energy Partners’ expects a year-over-year increase of 554% in earnings for the current year.

Evolution Petroleum anticipates earnings to soar 218.2% year over year in the current year.

Helix Energy beat the Zacks Consensus Estimate in each of the last four quarters with an average earnings beat of 31.42%.

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