For Immediate Release
Chicago, IL - January 6, 2012 - Today, Zacks Investment Ideas
feature highlights Features:
Plains Exploration & Production Company
(
PXP
),
Rosetta Resources Inc.
(
ROSE
) and
Berry Petroleum Company
(
BRY
).
3 Energy Stocks Gushing with Growth
Are the exploration stocks about to bust out of the
doghouse?
2011 was a tough year for many of the energy stocks, especially
the smaller explorers.
They were beaten down in the summer sell-off with some declining
50% as investors feared that a global recession was soon to start.
Any global slowdown would clearly mean lower energy prices.
But when that didn't happen, the exploration companies were
suddenly super cheap. They have since rallied off the summer lows
but haven't yet regained the old highs. They are still out of favor
with investors.
Will Iranian Tensions Be a Catalyst?
At the end of 2011, crude surged to close at just under $100 a
barrel. In 2012, the upward momentum has continued as the price has
risen 9 of the last 12 sessions and is still holding over $100.
Traders are blaming the saber-rattling out of Iran. Iran is
threatening to shut down the Strait of Hormuz, a major shipping
lane for crude, if the EU follows through with a proposed oil
embargo. Twenty-eight EU Foreign Ministers are meeting on Jan 30 to
debate an embargo but many believe it is probably a done deal.
The EU uses about 600,000 barrels of Iranian oil a day which
could be replaced by the Saudis if they raise production (which
they have already offered to do.) But the embargo would still make
tight supplies even tighter.
Analysts are already guessing we'd have $125 a barrel oil if the
oil embargo actually happens. It could go higher still if the
Strait of Hormuz was shut and/or an actual military conflict occurs
in the Persian Gulf.
The Magic Combination
What if you could buy a stock with a cheap valuation but which
was also growing its earnings by the double or triple digits? Too
good to be true? Not with some of the exploration companies.
Because the stocks are out of favor, valuations are very
attractive. That means P/Es below 15, which is what I usually deem
a "value" stock.
Earnings growth was explosive in 2011 and Zacks Consensus
Estimates are also flashing bullish signals about 2012 as another
year of double digit earnings growth appears to be on tap.
With the stocks so out of favor but the market now preparing for
the possible perfect storm of growing demand but tight supply due
to a Middle East oil shock, now may be a perfect time to add energy
positions to your portfolio.
3 Energy Companies With Explosive Earnings
Growth
Forget the small caps. The mid-cap explorers have great
valuations and amazing growth projections.
1. Plains Exploration & Production Company
(
PXP
)
Headquartered in Houston, Plains explores for oil and gas in
California, the Gulf Coast region, including the Haynesville and
Eagle Ford Shale, the Gulf of Mexico and the Rocky Mountains.
This Zacks #2 Rank (buy) has a $5.5 billion market cap.
2010 Earnings: $1.06
2011 Expected Earnings: $1.79 (growth of 69%)
2012 Expected Earnings: $3.30 (growth of 84%)
Forward P/E: 11.8
2. Rosetta Resources Inc.
(
ROSE
)
You might not have heard of Rosetta but it isn't a small company
as it has a market cap of $2.4 billion. Like Plains, is also based
in Houston but has exploration operations mainly in South Texas,
including the Eagle Ford shale and the Southern Alberta Basin in
northwest Montana.
It is also a Zacks #2 Rank (buy).
2010 Earnings: 61 cents
2011 Expected Earnings: $1.97 (growth of 223%)
2012 Expected Earnings: $3.54 (growth of 81%)
Forward P/E: 12.7
3. Berry Petroleum Company
(
BRY
)
Based out of Denver, this exploration company operates in
California, the Uinta basin in Utah, East Texas and the Permian
Basin and in Colorado.
This Zacks #2 Rank (buy) has a market cap of $2.4 billion.
2010 Earnings: $1.53
2011 Expected Earnings: $2.65 (growth of 73%)
2012 Expected Earnings: $3.92 (growth of 48%)
Forward P/E: 11.2
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BERRY PETROLEUM (
BRY
): Free Stock Analysis Report
PLAINS EXPL&PRD (
PXP
): Free Stock Analysis Report
ROSETTA RESRCS (
ROSE
): Free Stock Analysis Report
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