We’re be buying 200 shares of Coterra Energy (CTRA) at roughly $26.79 each. Following Monday’s trade, Jim Cramer’s Charitable Trust will own 1,750 shares of CTRA, increasing its weighting in the portfolio to 1.7% from 1.5%. As noted on the Morning Meeting, we’re stepping in to pick up some shares of Coterra Energy to kick off the fourth quarter as we see an opportunity to reduce our overall cost basis. We also do not believe shares are adequately reflecting the rise in natural gas prices over the past week and a half. Remember, Coterra’s business is about 50-50 nat gas and oil . It’s worth noting that CTRA stock was moving lower with nat gas and oil prices on Monday. CTRA @NG.1 1M mountain Coterra vs. Nat Gas 1-month performance Additionally, U.S. exports continue to rise due in part to Russia’s war in Ukraine. The U.S. Energy Information Administration recently reported that “the United States exported more LNG [liquefied natural gas] than any other country in the first half of 2023.” Better yet, the agency previously reported that export capacity is set to increase in 2024, providing another top-line tailwind for the company. The combination of these two dynamics — higher nat gas prices and more export capacity — along with management’s guidance in the company’s latest earnings report to increase production on nat gas and oil while keeping capital expenditures unchanged versus prior expectations should provide a nice benefit to the bottom line and more importantly cash flow generation. Cash flow is key to our investment thesis in Coterra Energy and the energy complex more broadly as it speaks directly to the ability to return that cash to shareholders via dividends and buybacks. Because of the pressure in commodity prices earlier in the year, management had no choice but to cut its cash flow guidance with the release of its second-quarter results. Those numbers reflected the three-month period that ended June 30. However, with the recent rebound in prices, should they hold into year-end, we wouldn’t be surprised to see actual results outpace the team’s downwardly revised guidance and as a result. The risk/reward becomes more favorable at current levels. (Jim Cramer’s Charitable Trust is long CTRA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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