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Shale Players Have Huge Upside

David Becker
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Crude oil prices have remained robust following the Fed’s decision to begin the tapering process, and producer in the Bakken Shale seemed to continue to benefit. Continental Resources (NYSE:CLR) is the largest shale playing in the zone and they are poised to benefit in 2014.

The main focus for CLR is the Bakken Shale which is located in South Dakota. The company was one of the early movers into the Bakken. Currently, it has the largest leasehold position in the area, with 1.2 million net acres. The company also states that it’s the most active driller and number-one producer in the region. A recent downgrade of the stock by Deutsche banks has led to the mild correction.

The 52-week range of CLR is $ 70.50 – $121.78, and the stock price hit a 52-week high in early November. The quarter over quarter earnings per share increased 85%, while the three year growth rate of earnings increased 40%. Sales increased 70% quarter over quarter and the three-year growth rate of earning increased 71%. The company has a very reasonable price to earnings ratio of 20, and a profit margin of 36.7%.

Recent insider buying makes the stock look attractive. Winston Bott the President and COO of the company purchased 1,500 shares for slightly more than 150,000 on December 11, 2013.

The technical outlook shows a stock that is correcting after moving to Goldman Sach’s (NYSE:GS) price target of $120 in Early November. Support is seen near the 200-day moving average at 99.00. The decline of the accumulation distribution line means that as the price is falling volume is falling which is a good sign. The RSI (relative strength index) is printing near 41, but a decline toward the 200-day moving average could push it into oversold territory.

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