Is APA Corp. (APA) Setting Up for a Big Move?

APA Corp. (APA) is one of the world’s leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. The company’s operations are in the United States, Egypt and in the North Sea of the United Kingdom…

APA Corp.’s (APA) increasing focus on the Permian basin, which is known for its high internal rates of return, has been a huge growth driver. Its slew of discoveries in offshore Suriname, through its joint venture with TotalEnergies, is another strong growth catalyst for the company and is expected to provide significant cash flow potential.

APA had $538 million in cash as of the end of the latest quarter, compared with only $2 million in short-term debt. Its gross margin of 26.8% is also above the industry average. While growth has been negative due to the pandemic, analysts forecast earnings to rise 506.2% year over year in the current quarter.

The stock also appears undervalued based on its forward P/E of 6.6. However, its trailing P/E is quite high at 954. The stock had been trending up since October, but has since shown mixed performance since March as evident from the chart below.

Take a look at the 1-year chart of APA below with my added notations…

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