The Fed announced its fourth consecutive 75-bps rate hike for 2022 to a target range of 3.75%-4%, the highest level since January 2008. The consecutive rate hikes this year have led to a significant market sell-off. 

However, despite the prevailing uncertainties, according to the latest AAII Sentiment Survey, bullish sentiment among individual investors regarding the short-term direction of the stock market soared to a nine-week high. 

Therefore, we think it might be best to invest in APA Corporation (APA) and Ovintiv Inc. (OVV), which have gained momentum thanks to soaring oil prices. These stocks are currently trading under $50 and are well-positioned to maintain their momentum. 

APA Corporation (APA)

APA and its subsidiaries explore for, develop, and produce natural gas, crude oil, and natural gas liquids (NGLs). Its upstream business has exploration and production operations in the United States, Egypt, and the United Kingdom and has exploration and appraisal operations in Suriname. 

On November 2, 2022, John J. Christmann IV, APA’s CEO and President, said, “APA’s diversified and unhedged portfolio delivered another strong quarter, generating $609 million of free cash flow.”

For the third quarter that ended September 30, 2022, APA’s total revenues came in at $2.89 billion, up 40.2% year-over-year. Its net income came in at $422 million, compared to a loss of $113 million in the year-ago period, while its EPS came in at $1.28, compared to a loss per share of $0.30. Moreover, its adjusted EBITDA came in at $1.69 billion, up 45.9% year-over-year.

APA’s revenue is expected to increase 22.7% year-over-year to $9.73 billion in 2022. Its EPS is expected to increase 114.6% year-over-year to $8.37 in 2022. Over the past month, the stock has gained 29.4% to close the last trading session at $44.24. The stock is trading above its 50-day moving average of $40.01 and 200-day moving average of $38.62.

It’s no surprise that APA has an overall B rating, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

In addition, it has an A grade for Momentum and Quality and a B for Growth and Value. APA is ranked #10 of 94 stocks in the B-rated Energy – Oil & Gas industry. Click here for the additional POWR Ratings for APA (Stability and Sentiment).

Ovintiv Inc. (OVV)

OVV and its subsidiaries explore, develop, produce, and market natural gas, oil, and natural gas liquids. It operates through USA Operations; Canadian Operations; and Market Optimization segments.

On August 3, 2022, OVV’s President & CEO, Brendan McCracken, said, “We are resolute in our goal to unlock value for our shareholders. We expect to deliver more than $1 billion to our shareholders in 2022, and assuming current strip pricing, we expect shareholder returns to more than double in 2023.”

OVV’s total revenues increased 120.8% year-over-year to $3.74 billion for the second quarter that ended June 30, 2022. Its net earnings came in at $1.36 billion, compared to a loss of $205 million in the prior-year period, while its EPS came in at $5.21, compared to a loss per share of $0.79 in the previous period.

OVV’s revenue is expected to increase 28.4% year-over-year to $11.11 billion in 2022. Its EPS is expected to increase 96.5% year-over-year to $9.63 in 2022. Over the past month, the stock has gained 8.4% to close the last trading session at $49.85. The stock is trading above its 200-day moving average of $48.46.

OVV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.

OVV has an A grade for Momentum and a B grade for Value and Quality. Within the A-rated Foreign Oil & Gas industry, it is ranked #21 of 43 stocks. Click here for the additional POWR Ratings for Growth, Stability, and Sentiment for OVV.

APA shares were trading at $46.58 per share on Thursday afternoon, up $2.34 (+5.29%). Year-to-date, APA has gained 76.06%, versus a -20.82% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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