Cimarex Energy (XEC) gave shareholders something to cheer about earlier this week with a stellar earnings report that might have gotten overlooked due to the overall sell-off in equities. However, analysts sure seemed to have noticed as several raised their price targets on this fast growing E&P concern. Growth investors should put the company on their radar as well.
Recent positives for XEC:
- The company provided its fourth quarter earnings report this week and Cimarex easily beat consensus on both the top and the bottom lines. It was the second quarter in a row the company beat earnings estimates after a few disappointing quarters.
- JPMorgan just raised its price target to $79 on the shares from $72 a share.
- Dahlman Rose also reiterated its "Buy" rating and raised its price target to $80 from $70 on the shares.
- CLSA recommended the shares and put an $89 price target on XEC.
Cimarex Energy is an independent oil and gas exploration and production company primarily in Texas, Oklahoma, New Mexico and Kansas.
Four reasons XEC is a solid buy for growth investors at $69 a share:
- Analysts project the company will grow revenues in the mid double digits for both FY2013 and FY2014.
- The company has grown its operating cash flow by approximately 70% over the past three years and the stock is selling at roughly 5.5x operating cash flow.
- Cimarex has a diversified asset base and a conservative balance sheet. Global Hunter believes the company may have more than 860 future drilling locations in its core areas.
- The company is doing a good job of improving its production mix. oil and liquids now make up almost 50% of production. Cimarex grew oil and liquids production at a double digit rate in 2012 while natural gas production slightly declined. All of the company's cap-ex is geared to oils and liquids production. The shares trade at a reasonable 12x forward earnings given analysts growth projections.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.