52 Week Highs (Oil/Gas Sector)

Many people are hesitant to buy stocks when they are at their 52-wk high. Honestly I can relate, there is nothing worse than buying in at a 52-wk high and watching the stock slide. You always know that you bought at the top of the range, and that will be the resistance point.

That said, I can highlight several instances where I have bought at the 52-wk high and done just fine. For example I bought Chevron (CVX) at its 52-wk high back in September and I’m up over 20% on that trade. Some more recent examples; on December 29th I bought El Paso Energy (EP) at its 52-wk high and today I’m up over 25.5% on that trade. Proving that momentum can carry a stock from its high to a much higher high. Similarly on January 5th I rolled the dice to get in on Hess (HES) at a near 52-wk high, after several weeks of waiting for a pullback that never happened. In the 5 weeks since I’m up 6.45% on that purchase.

For sure it does not always work out this well, but I am not letting a 52-wk high on ConocoPhillips (COP) scare me away from a trade I have been waiting to make for several months. During the past 3 months COP has outperformed Total (TOT) +22.64% vs. +13.90%, and more alarmingly +10% vs. +3% in the last month. TOT has a nicer dividend yield, but I believe that Total’s positioning itself heavy in Canadian tar sands is a poor long-term decision. For performance alone I would rather be in COP than TOT, add in my belief that their long-term strategy is wrong and you can see why I’ll sell TOT for a +25% gain and buy into COP even at its current 52-wk high.