Buy Alert: February 15, 2013

Marcus Haber | February 15, 2013

Buy Alert: February 15, 2013

Trade Details

Buy Apache (APA) March $80 Calls for $1.35 or better

Why?

APA shares are plunging after a disappointing earnings report this week. But, I think the selling is way overdone.

The company missed slightly on earnings due to higher costs and lower oil and gas prices. However, they did beat revenue expectations by $20 million. What’s more, oil and gas prices fluctuate quite a bit and don’t reflect on the company whatsoever.

The other bit of negative news is on the production side. The production outlook for both oil and gas was lower than expected due to weather disruptions in Australia. Once again, there’s nothing Apache can do about the weather.

I just don’t feel a nearly 10% pullback in the shares is justified based on the earnings news. APA is a company with strong cash flow and a massive amount of assets. And, now it’s trading well below its key moving averages.

Let’s snap up some March calls in anticipation of a quick turnaround.