Wednesday's market was a roller coaster. After being up more than 150 points on the Dow early in the day, the market reversed and ended significantly down across the board. This is the first time this type of reversal has hit the market since March 2009 as investors seemed to wake up and realize how dependent the market is on continued massive Federal Reserve largesse.
I think it is too early to deploy major cash into the market as I think we have a significant pull back ahead. However, putting some cash into the market in small amounts on days like these makes some sense. Finding stocks that are performing better than the overall market appears to be a sound strategy. Here are two independent energy concerns that bucked the sell-off Wednesday on back of analysts' upgrades.
Pioneer Natural Resources (NYSE:PXD): $143 a share, is a large (~$20B market capitalization) independent oil and gas exploration and production company in the United States. Both RBC & UBS both raised their price targets on PXD Wednesday. The shares are also the largest holding of noted oilman's T Boone Pickens' fund. Earlier in the month, FBR Capital impressively raised its price target on PXD from $125 to $225 a share earlier in the month. The company recently announced positive initial drilling results from its huge 900K acre Spraberry/Wolfcamp leasehold. The company believes its positions in the region could hold up to 4.6B of BOE (Barrels of Oil Equivalent). The stock seems pricey at ~24x 2014's projected earnings but is cheap on a NAV (Net Asset Value) basis.
Laredo Petroleum (NYSE:LPI): $19 a share, is a midsized (~3.8B enterprise value including debt) independent energy company that produces oil and natural gas primarily from its assets in the Permian and Mid-Continent regions of the United States. BMO Capital raised its price target from $21 to $24 a share Wednesday. Topeka Capital initiated the shares as "Buy" last Friday and put a $23 price target on the stock. The company also announced it was selling its Anadarko basin assets for $438mm to EnerVest recently. Laredo will deploy this capital to expand its production from its assets in Permian basin which it believes will result in higher returns. The company has grown its operating cash flow by ~125% since the end of FY2010 and LPI is priced at less than 8x trailing operating cash flow. Analysts expect the company to deliver revenue growth at more than a 20% CAGR over the next two fiscal years.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PXD over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.