One sector, three small-cap stocks breaking out on charts | Stock Market News – Mint

The small-cap space has been a hotbed of volatility over the past year, but a select few sectors are emerging as resilient amidst the market turbulence. Energy stocks have been among the beneficiaries, as soaring oil and gas prices drive significant earnings growth and buoy the industry.

With an array of positive tailwinds in its favor, it’s not surprising to see the sector breaking out on the charts. If you’re interested in adding energy stocks to your portfolio, here are three small-cap names showing signs of breakout.

Callon Petroleum Company (NYSE:CPE)

Callon Petroleum is a Texas-based independent oil and natural gas producer with a primary focus on the Permian Basin. CPE shares surged over 30% last week following an impressive Q1 earnings report.

Here’s what impressed analysts:

• Strong revenue and earnings: The company generated revenue of $749.1 million in the first quarter, beating analysts’ expectations by $64.7 million. This translated to earnings per share of $2.14, easily surpassing the projected $1.65.
• Increased production: Callon boosted its oil and gas production, leading to a jump in profits. This suggests a commitment to driving sustainable growth and achieving operational excellence.
• Elevated share repurchases: The company intends to utilize its robust cash flow generation to buy back its own shares. This is a signal to investors that the company is optimistic about its future and believes its stock is undervalued.

On a technical level, Callon’s price action is quite impressive. After hitting a new all-time high in February, shares saw a pullback to around $28. After consolidating below $30 for nearly two months, CPE finally found its feet and roared past the downtrend line in mid-May. As long as it trades above this important level, the technical bias for CPE remains bullish, with $40 as the next target.

If you are seeking exposure to the energy sector and believe that oil and gas prices are poised for further gains, Callon Petroleum is an interesting option for your consideration. The recent breakout is promising, and the company’s track record of outperforming expectations reinforces its attractiveness to investors. However, always conduct thorough due diligence before investing.

Matador Resources Company (NYSE:MTDR)

Matador Resources is another independent oil and natural gas producer that specializes in exploration, development, and production. Similar to Callon, Matador holds significant acreage in the Permian Basin, making it well-positioned to capitalize on the surging oil and gas prices.

Shares of Matador have gained roughly 60% this year, and this incredible upward trajectory can be attributed to a string of favorable factors.

• Strong production and profitability: Matador’s commitment to driving efficient operations is evident in its increased oil and gas production. The company also demonstrated resilience in navigating challenging market conditions, as it continues to deliver solid profit margins.
• Share buyback program: Matador shares have been heavily repurchased, demonstrating the company’s belief in its long-term growth potential and commitment to returning value to investors.
• Significant investment in infrastructure: The company has embarked on significant investments to optimize its operations. This proactive approach is laying the foundation for further growth and sustained profitability.

Looking at MTDR’s technical chart, a significant upward breakout has formed, with shares trading above the crucial $45 level. This level has proven resistant on previous occasions, so overcoming it could usher in a more bullish phase for MTDR shares. This breakout is especially impressive given that the stock has recently overcome an ascending trend line and a crucial 200-day moving average.

Matador Resources represents a compelling investment opportunity for investors seeking growth potential in the energy sector. The combination of robust fundamentals and the recent technical breakout paints a positive picture. However, remember that even the most promising investment carries risk, so make sure to conduct in-depth research.

Concho Resources Inc. (NYSE:CXO)

Concho Resources is another company focused on the development and production of oil and natural gas in the Permian Basin. Concho, similar to Matador and Callon, has benefited from soaring oil and gas prices.

In addition to these benefits, here are some factors that make Concho Resources a compelling option for small-cap investors.

• Industry leadership and scale: Concho is one of the leading players in the Permian Basin, with substantial reserves and significant scale advantages.
• Sustainable growth: The company is committed to a consistent increase in its oil and gas production. This will create future value and bolster revenue growth.
• Robust financial standing: Concho’s solid balance sheet is supported by a track record of consistent profit generation. This financial strength enables the company to invest in its growth and navigate market volatility with resilience.

Looking at CXO shares on the chart, a clean breakout above the 50-day and 200-day moving averages in early June confirmed a shift in momentum in favor of the bulls. The bullish move is evident in the price action, and it is worth noting that the relative strength index (RSI) has been trending upward, suggesting an increase in positive sentiment. This indicates a potential for further gains, with an upward target of $130, the all-time high level achieved in February 2023.

Given Concho Resources’ position as an industry leader, along with its focus on growth and value creation, the stock presents a compelling opportunity for those seeking exposure to the energy sector. The breakout on the charts is a further testament to the bullish sentiment surrounding the stock. Keep in mind that the energy sector is inherently volatile, so careful analysis is crucial for any investment.

Investor Takeaway

All three small-cap energy stocks—CPE, MTDR, and CXO—are showing a clear technical breakout pattern, suggesting they may be poised for continued upside movement. Investors who are confident in the oil and gas sector may consider these companies.

While each company has its own unique set of strengths and risks, all of them offer exposure to a market that’s driven by strong fundamentals and supported by positive market trends. If you’re searching for opportunities within small-cap stocks, consider adding some energy exposure to your portfolio.

Remember that the information presented here should not be considered financial advice. Conduct thorough research, seek expert advice if needed, and only invest in stocks that align with your risk tolerance and financial goals.