A roller-coaster week for crude has left traders in a dizzying state of confusion about which direction oil will move next. Yet one shale analyst is so confident in his top oil pick that even his grandmother is taking his advice and buying the stock.
Shares of oil exploration company Concho Resources, which bills itself as the leading Permian Basin operator, fell more than 40 percent from mid-June to mid-December. Oil has continued its whipsaw volatility since that time, but shares of Concho have reversed, gaining back about 30 percent from their December lows.
Right around the time of those lows, Global Hunter Securities Managing Director Mike Kelly said on CNBC that if oil were to fall below $50 per barrel, it would be time to "put grandma's money to work" in a name like Concho. In January, Kelly said that his grandmother had in fact taken his advice to heart.
"I got a call from my grandma yesterday, oil went down below $50, and she literally thought I was talking to her," he said. "She said, 'Me and the girls at Buehler Home in Peoria, Illinois, we bought into Concho.'"
So far, that trade has paid off.
On Tuesday, Kelly said in an interview on CNBC's "Fast Money" that he continued to like the name even in the face of oil's volatile moves. "We put out a big earnings report this morning and we named Concho as a top pick," he said then.
Kelly isn't alone in his affinity for the stock. According to data from Thomson ONE, the company currently has 23 "buy" or "strong buy" ratings, six "hold" ratings, and no "underperform" or "sell" ratings from analysts.
Stifel Nicolaus analysts upgraded the stock to "buy" from "hold" on Tuesday, saying Concho is poised to benefit from an expected oil price recovery and that it has a strong balance sheet.
Kelly also noted what he called "a pristine balance sheet," and said the company could look toward new acquisitions.
'They're getting a little greedy'
"They've done a really good job of it in the past," he said. "There's going to be guys that are struggling, they don't have the liquidity that Concho has in a high-quality basin like the Permian, and if they can take advantage of that, ultimately it's going to be a great long-term move."
In its January investor presentation, Concho said the company is "well-positioned for the current environment," and said it is targeting 16 to 20 percent production growth in 2015.
Despite widespread bullish sentiment on the Street and an optimistic tone from the company, the "Fast Money" traders said it may be time to take profits.
"Kudos to his grandmother," said Steve Grasso of Stuart Frankel, "but CXO, the expectations are so high there ... I would sell out of CXO and buy Whiting."
Brian Kelly of Brian Kelly Capital also said he would "sell out of Concho and take my profits there."
Mike Kelly's grandmother and her friends may not heed those words of caution.
"They're getting a little greedy. They want 20 percent more on Concho before they cash in and go play penny slots," he said.