SandRidge Energy Inc. (SD): 1 Energy Stock I’m Buying This June

The catalyst
For me, the two points above would be a compelling enough to buy shares of SandRidge Energy Inc. (NYSE:SD). However, there is one looming catalyst which, in my opinion, means investors should buy sooner rather than later. You see, this catalyst comes with a very specific timetable.

The newly expanded board of directors has until June 30 to determine if CEO Tom Ward stays with the company. My gut feeling tells me that Ward will be joining the former Chesapeake Energy CEO in an early retirement. That could be the outcome of the board’s decision at the end of the month, or if the board allows him to say, he might not stay long, as a majority of the board will then be made up of nominees from activist investors pushing for change.

So far, the activists have been, well, active. We’ve already seen SandRidge begin to focus its operations, cut its spending and give up on some of its overly ambitious plans. I don’t see the newly constituted board stopping now, meaning that the company could explore strategic options to unlock some of its vast value potential.

My trade
I want to get ahead of this opportunity which is why I think that buying shares around $5 is a very compelling price to pay for the stock. However, because of the uncertainty surrounding SandRidge’s future, this could be a bumpy ride. What I like to do in situations like this is to buy some shares and write puts to target additional shares cheaper. Specifically, my plan for SandRidge is buy half of my intended allocation outright and then write September $5 puts to try and fill out the rest of my allocation. The option income will help cushion any blow if shares initially react negatively to the board’s decision at the end of the month.

Foolish bottom line
SandRidge Energy Inc. (NYSE:SD) is one of the more compelling opportunities in energy today. It has a great position in an emerging oil and gas play, its fundamentals are improving across the board and it has a time sensitive catalyst. I like what I see here, which is why I’m buying SandRidge this June.

The article 1 Energy Stock I’m Buying This June originally appeared on Fool.com.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of Devon Energy and has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy.

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