We're buying more energy shares that are not reflecting recent moves in natural gas

Published Mon, Oct 2 202310:53 AM EDTUpdated Mon, Oct 2 202312:35 PM EDT

We're be buying 200 shares of Coterra Energy (CTRA) at roughly $26.79 each. Following Monday's trade, Jim Cramer's Charitable Trust will own 1,750 shares of CTRA, increasing its weighting in the portfolio to 1.7% from 1.5%. As noted during the Club's Morning Meeting, we're adding more shares of Coterra Energy to our portfolio — putting cash to work in what continued to be an oversold stock market, according to Jim Cramer's trusted S & P 500 Short Range Oscillator . Coterra shares on Monday were moving lower alongside natural gas and oil prices, which were bucking their recent upswing. CTRA @NG.1 1M mountain Coterra vs. Nat Gas 1-month performance Buying CTRA on the dip also provided an opportunity to reduce our overall cost basis in the stock and to take advantage of shares not adequately reflecting the rise in nat gas prices over the past week and a half, Monday's action notwithstanding. Remember, Coterra's business is about 50-50 nat gas and oil. Additionally, U.S. exports continue to rise due in part to Russia's war in Ukraine. The U.S. Energy Information Administration recently reported that "the United States exported more LNG [liquefied natural gas] than any other country in the first half of 2023." Better yet, the agency previously reported that export capacity is set to increase in 2024, providing another top-line tailwind for the company. The combination of recently higher nat gas prices and more export capacity — along with management's guidance in the company's latest earnings report to increase production on nat gas and oil while keeping capital expenditures unchanged versus prior expectations — should provide a nice benefit to the bottom line and more importantly cash flow generation. Cash flow is key to our investment thesis in Coterra Energy and the energy complex more broadly as it speaks directly to the ability to return that cash to shareholders via dividends and buybacks. Because of the pressure in commodity prices earlier in the year, management had no choice but to cut its cash flow guidance with the release of its second-quarter results. Those numbers reflected the three-month period that ended June 30. However, with the recent rebound in energy prices — should they hold into year-end — we wouldn't be surprised to see actual results from Coterra outpace the team's downwardly revised guidance. (Jim Cramer's Charitable Trust is long CTRA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

The New York Stock Exchange.

Gabby Jones | Bloomberg | Getty Images