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Why This Top Financial Blogger Said Chesapeake Energy Is 'Not Going Anywhere Soon'

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David Alton Clark was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick.

Financial blogger David Alton Clark disputed a widely held belief that Chesapeake Energy Corporation (NYSE: CHK) is a proxy for natural gas prices. The problem with the stock: Chesapeake Energy has "some baggage" related to how highly leveraged the company's assets are.

Further, Clark said Chesapeake has "credibility issues," an issue that was highlighted but not solved when former CEO Aubrey McClendon was with the company. In total, Clark said Chesapeake is "not going anywhere soon."

Clark said that natural gas is going to trade sideways, while he does see crude oil prices trending lower as tensions in the Middle East abate. His play on natural gas is Kinder Morgan Inc (NYSE: KMI), which has a strong pipeline infrastructure to transport the commodity. Kinder Morgan "isn't exposed that much to crude oil," but is a "big play on natural gas." Clark said that natural gas is going to be "the fuel of choice" for power plants.

Year-to-date, Kinder Morgan is flat, while offering a 4.5 percent dividend yield. Chesapeake Energy, on the other hand, has slipped more than 22 percent with a yield of 2.3 percent.

 

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Posted-In: chesapeake energy David Alton Clark Kinder MorganLong Ideas Commodities Exclusives Markets Trading Ideas