close icon

CVR Energy: Once in a Lifetime Opportunity

Crude oil took a hard hit during the last two years. A barrel cost more than $107 in June, 2014. By February, 2016, it was trading slightly above $26. The crash was so swift and severe, it seems hard to believe that the price of oil will ever rise above $100 a barrel again. Besides, companies like Tesla Motors and SolarCity have set their goal to completely eliminate mankind’s dependency on the commodity. The advance of renewable energy could spell the end of the petrol era as we know it. However, it will be a slow process. It is not going to happen overnight, so the question is could petrol refining companies adapt to this new low oil price environment? Warren Buffett thinks they can.
CVR Energy Inc. is a petrol refining company, founded in 1906. It went through the “Panic of 1907”, it survived the Great Depression, the Oil crisis in the 1970s, the crash in 2000 and the Great Recession of 2007-2009. If history is any guide, CVR Energy is a company, which will not go away just like that. But the company’s stock fell from above $72 to as low as $13 a share between May 2013 and August 2016. As it turns out, oil’s crash is enough to make investors eager to get rid of their CVR shares. Well, the Elliott Wave Principle says this is the exact opposite of the right decision right now. The chart below explains why.
cvr energy 9-9-16
The weekly chart of CVR Energy shows the stock’s development since October 2008, when prices refused to decline below $2.15 a share. This level was the starting point of a five-wave impulse with an extended fifth wave all the way up to $72.32 less than five years later. According to the Wave Principle, impulses show the direction of the larger trend, but every impulse is followed by a three-wave correction, before the trend resumes. In other words, CVR Energy’s crash since 2013 is nothing more than a natural three-leg retracement in the form of an (a)-(b)-(c) zig-zag with a running flat in wave (b).

If this is the correct count, it looks like CVR Energy stock is offering a “once in a lifetime” buying opportunity. Buffett says that oil refining can be profitable regardless of the oil price. The 5-3 wave cycle, visible on the weekly chart of CVR’s stock, supports the bullish idea. In our opinion, instead of running away, investors should be grabbing CVR shares right now, especially with targets above $73 in the long term.



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Rapid7 Doubles As Elliott Wave Setup Bears Fruit

We first wrote about Rapid7 in late-August 2019. The stock was hovering above $55.50, but the structure of the post-2016 uptrend suggested a notable decline was in progress. In March 2020, it fell to $31.34, down 52.5% from its all-time high. A month later, with RPD still below $47, we shared our bullish stance on…

Read More »

PNC Financial – Elliott Wave Analysis Works Yet Again

Earnings at PNC Financial suffered last year along with the entire financial sector. Net income before extraordinary items came in at $2.95B in 2020, down from $5.35 in 2019 for a 45% reduction. In our opinion, amid the biggest crisis since the Great Depression, the fact that PNC and its peers even managed to stay…

Read More »

Betting on 3i Stock a Year Ago Pays Off in Spades

The first time we wrote about 3i Group was in late-October 2019. The stock was hovering around 1100 pence a share following a 1000% gain in the past ten years. Needless to say, few thought a major decline was even possible. Fortunately, Elliott Wave analysis helped us see the bulls cannot be trusted. Five months…

Read More »

Ahead of Hibbett ‘s Unlikely Surge to New Records

Hibbett Sports Inc. is an American sporting goods retailer with more than 1000 stores in over 30 states. We first wrote about the company in the summer of 2017. The stock was trading below $16 a share back then, following a decline from as high as $68.31 in late-2013. At first glance Hibbett looked like…

Read More »

Walgreens Stock Confirms Downtrend is Over

Walgreens stock had been declining for over five years between 2015 and 2020. One of the largest pharmaceutical retailers in the world reached an all-time high of $97.30 in August 2015. In late-October 2020, it fell to $33.36, losing almost 66% from the record. It must have been difficult for Walgreens investors to keep a…

Read More »

Interpublic on the Verge of Doubling Amid Pandemic

We first wrote about Interpublic in March 2018. The stock had just reached $26 a share, but we thought an Elliott Wave correction can “easily erase about 50% of Interpublic ’s market capitalization.” Two years later, during the coronavirus panic in March 2020, IPG fell to $11.63, down 55% from the 2018 high. Fortunately, the…

Read More »

Expedia Acts As If Travel Restrictions Do Not Exist

We last wrote about Expedia in mid-2020. Countries around the globe had mostly closed their borders, the COVID-19 vaccine was still just a hopeful prospect and the summer travel season was practically ruined. No wonder the stock of Expedia, one of the largest travel booking companies, was down 46% from its 2017 high. Yet, during…

Read More »

More analyses