Bull of the Day: Ecopetrol (EC)

I can explain why Ecopetrol (EC) is today’s Bull of the Day using three simple charts. Of course, it’s a Zacks Rank #1 (Strong Buy) in an industry which ranks in the Top 2% of our Zacks Industry Rank, but that’s only part of the story. By looking at these three charts, it’ll make perfect sense why this is the Bull of the Day. After all, a picture is worth a thousand words.

Ecopetrol S.A. operates as an integrated oil company. It operates through three segments: Exploration and Production; Transport and Logistics; and Refining, Petrochemical and Biofuels. The company produces crude oil and gas; and engages in the extraction, collection, treatment, storage and pumping, or compression of hydrocarbons. It also transports and distributes hydrocarbons, derivatives, and products.

Chart #1: Crude Oil

The main good being produced for Ecopetrol is crude oil. Crude has been very kind lately, breaking out from a downward trend channel in early September, pushing above the 50-day moving average and never looking back. Recently it butted up against resistance in the mid-$50s but has since broken out to the upside. With crude at fresh highs and trouble brewing in Saudi Arabia, crude is off to the races.

Chart #2: Price, Consensus and EPS Surprise

You want to talk about a scary ride, just look at the tumble EC took from 2013 through 2015. The stock came all the way down from $60 single digits. That is enough to turn anybody green in the face. Note how the earnings estimates in the multi-colored lines came down throughout those years. Something has changed here recently. Estimates have troughed and taken a turn to the upside. Not only are current year estimates on the rise but there is the promise of growth next year. That turnaround has been a major tailwind for the stock.

Chart #3: Technical Chart

The last chart here is the technical chart, outlining not only the breakout to new 52-week highs but also the shift in the Chaikin Money Flow indicator. This indicator attempts to show the buying pressure in a stock. When the CMF crosses over the zero line, it’s an indication of large buying volume, a hint that institutions are getting in the game. The skyrocketing CMF here implies some major players have been loading the boat on EC.

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