Six reasons why late April gas stock rally is likely a head fake rather than a sustainable near-term rally
Canadian gas-weighted stocks experienced a modest rally in late April, with high quality, larger capitalization names posting best-in-class returns over a two-week period. On average, gas stocks gained about 20% through late April/early May; however, they have given back more than half of their gains over the past two weeks, supporting our view that the equity rally may have been somewhat premature.
The stocks were clearly punished by the market prior to the rally given the weak natural gas outlook, which has improved markedly over the past several weeks from both a supply and demand perspective.
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