Mixed Fortunes of Oil & Gas - Ezra, Swissco

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Mixed Fortunes of Oil & Gas

1. Ezra (Oil & Gas)
Ezra's year-start rally had its wings clipped severely after the company reported a 49% drop in 1Q net profit of US$6.8 million on 14 Jan. That resulted in a week tumble and the share price reduction continued this week with strong selling pressure. Despite all the enthusiasm regarding oil & gas counters, it is clear that cherry picking in this time of intense competition will still help the investor weed out stocks that are potential pit-falls. 

• Selling continued this week seeing the stock tumble a further $0.04 from last week's close. In these 2 weeks, share prices have plummeted almost 14 cents. On the fundamental front, stock prices have been hit by poor profits, in canny resemblance to the situation Rotary engineering was in in 2012. Bad news at a fragile time.
• MACD - declining positive divergence with MACD failing to challenge the Sept 2012 peak. Possible turnaround/volatility to ensue. 
• RSI (25w) - perched along the 50% levels
• Short with TP - $$1.09 (-6.5% from current levels) in the near term. If selling pressure still persists, expect the stock to continue down to the next support level at $0.97 which translates to almost a 2012 low.

2. Swissco (Oil & Gas)
Another of my long-tracked counter that only recently staged a spectacular increase in its share prices. Had all along felt a mismatch in fundamentals of the company with the its stock price (almost constant in 2012 after the year-start rally). Nonetheless, it is always an intriguing question to when such an inefficiency will eventually realised in the market - sometimes perhaps never. So happen, the time for this stock seem to have arrived on the back of very thin news. 

• Prices challenged the key support levels at $0.27 last week to close above. This week, prices have shot above $0.30 for the first time though late selling today in the SGX caused prices to fall back to $0.295.
• MACD - MACD has been on the rise for the past 5-6 weeks and does not seem to be waning any time this week.
• RSI (25w) - RSI, though, has hit 70% on the back of a very strong run.
• Long with fast TP - $$0.32 (8.5% from current levels) over 2-3 weeks. Prices are straddling between $0.33 and support by $0.27 with little in between. Still some room more for the rally to run unless selling pressure takes over and prices go back to $0.27 support again.

Jump on the Oil & Gas Bandwagon? Part 1 - Ezion, Swiber, Swissco

A favorable news article on the Straits Times on Saturday offered some insights into trading this period of quantitative easing from major economies by targeting the (usual) Oil & Gas sector. However, it was highlighted that the favourite pick was not big cap stocks such as Semb Corp, Keppel Corp or Semb Marine. Instead, the article focused on mid cap stocks with good order books and growth potential such as Ezion, Ezra and Swiber. 

Ezion has definitely caught the attention of many traders over the last 1 plus year owing to a managerial and strategy turnaround that has been yielding very decent cash flows, increasing stockpile of cash as well as orders. It was also mentioned in the article that its strategy to have one of the most innovative fleet of jack-up liftboats that provides for offshore industries was a real gem in its managerial direction. Other players such as Swiber and Ezra are companies that been there and done that, very solidly and stably run over the years with a very localised culture but yet international presence. Swiber has an order book of $1.5billion in the pipeline, definitely more than sufficient revenue to last the next 3-5 years.

Of course, there are many other hidden gems that are Oil & Gas players that were not mentioned in the article such as Kreuz, Swissco and, the almost forgotten, Rotary.

Let's take a look at how you can participate in the Oil & Gas rally that has really mimicked the STI's performance over the last year (as seen from the ST news article on Saturday). Listed are technical charts of Ezion, Swissco and Swiber. For charts on Ezra, Rotary and Kreuz, refer to part 2 of this article here.

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