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The nation is in the midst of an oil & natural gas drilling boom that is expected to last for years and advanced recovery methods are helping production soar. However, the energy sector has been a laggard during the 2013 market rally, but experts believe that the unloved stepchild is about to receive its invitation to the party. If you missed the main-event that started in January, these three energy-related stocks could help you crash the after-hours party. These stocks surfaced through my discount brokerage screening application for under-value and low P/E ratios relative to their peers.

StealthGas Inc. (NASDAQ:GASS)

StealthGas is a small-cap company headquartered in Greece that provides international seaborne transportation services to liquid petroleum gas (NYSE:LPG) producers and users. The Company's 33 pressurized vessels carry a variety of LPG products which are byproducts of oil and natural gas production. These products are transported in liquefied form to reduce volume and facilitate handling by ocean going vessels like those owned by Stealth Gas.

United States (U.S.) LPG shipments rose 33% last year and annual shipments will reach 12 million metric tons by 2015, more than doubling 2012 levels. LPG production growth is occurring as a result of the oil boom. There are no pressurized ships available in the U.S., and while there is a worldwide glut of crude oil tankers, there is an acute shortage of LPG pressurized vessels that is worsening! StealthGas is purchasing five additional pressurized ships to address increased demand for LPG transport services that is being fueled by recent U.S. Coast Guard regulation changes allowing the shipping of LPG from U.S. ports.

Valuation Metrics

StealthGas's annualized earnings per share growth rate over the next three years are expected to be 81%, nearly six times sector expectations. StealthGas has a price to cash flow (P/CF) ratio of 3.6 versus the industry average of 6.3. Generally, P/CF ratios under 10 are a positive indicator of value; the lower the ratio, the more undervalued the company relative to its peers. The company's price to earnings growth (PEG) ratio is a low 0.41 compared to the 0.99 industry average. There is some concern about StealthGas's debt level, but it is not far out of line with industry averages. As of June 25th, StealthGas was trading at nine times estimated 2013 earnings of $1.38 per share, and just eight times 2014 projected earnings of $1.70. An 11 multiple is reasonable for this stock given the industry average of 30 times projected 2013 earnings, and overall market average of 13 times projected 2013 earnings. Analyst sentiment is bullish with mostly buy recommendations with stock price targets ranging up to $14.50 per share.

Halcon Resources Corporation (NYSE:HK)

Formerly known as Ram Energy Resources, Halcon Resources is a mid-cap independent oil exploration, development and Production Company headquartered in Houston, TX. The company fell upon hard times; however, two years ago, a veteran of the oil industry, CEO Floyd Wilson and his seasoned management team came to Halcon on a turn-around mission, and so far it looks to be on track.

Valuation Metrics

Halcon's earnings per share are estimated to increase 129% over the next 36 months. At the writing of this article, the stock was trading at 17 times forecasted 2013 earnings but just eight times 2014 earnings estimates. Any mention of other traditional measures of value such as PEG ratio P/CF ratio would scare the life out of you and are not really pertinent to this argument, as Halcon Resources is not an undervalued company as it currently sits, but rather a turn-around prospect. It was nice to see that reported cash flow per share Increased 211% year-over-year and revenues for the first quarter, 2013 increased to $190.7 million, compared to $26.9 million for the first quarter, 2012. Both are good signs that it's moving in the right direction

There is concern about Halcon's high debt level, but the company is in the midst of an asset divestiture plan for everything not considered essential to its strategy of building an oil company focused on 3-5 core resource plays. Divestiture proceeds are likely be directed to debt reduction that should strengthen the balance sheet.

Halcon's first quarter, 2013 report shows company-wide average daily production increased 542% year-over-year. Its Bakken production alone was up 40% from last year. The company has successfully completed dozens of new wells in the last 12 months and is in the process of drilling dozens more. The new wells have more oil than gas and CEO, Floyd Wilson says the "flowback" data from the wells is encouraging and he is committed to building infrastructure that brings Halcon's oil to the most profitable markets.

On June 25th, Halcon was trading at $5.43 per share and recently released a solid operations update report. Analyst sentiment is bullish with mostly buy recommendations with stock price targets ranging up to $9 per share.

Adams Resources & Energy, (NYSEMKT:AE)

Adams Energy is a small-cap oil & natural gas company headquartered in Houston, Texas and founded by Bud Adams, owner of the NFL Tennessee. It purchases crude oil and natural gas and arranges sales and deliveries to refiners and other customers; offers value added services by providing access to common carrier pipelines and handling daily volume balancing requirements; markets branded and unbranded refined petroleum products, such as motor fuels and lubricants; transports liquid chemicals, and engages in domestic oil and natural gas exploration and development. The dividend is $0.88 and yields 1.3%.

Valuation Metrics

On May 8th the company reported in oil industry jargon, a "Blow Out" first quarter, with earnings of $1.90 per share, up 21.7% from a year ago. This followed a hugely successful fourth quarter, 2012, with reported earnings of $1.79 per share, up 58% from the prior year. Adams Energy's five- year annualized earnings growth is nearly 17% and should remain solid given the pattern of oil and natural gas production in the U.S.

As of Tuesday, June 25th the stock was trading at eight times estimated 2013 earnings of $7.47 per share. 11 is a reasonable multiple for this stock given its five-year average price to earnings of 12 and a current industry average of 22 times projected 2013 earnings. The company has a P/CF ratio of 5.5 versus the industry average of 10. The PEG ratio is high compared to the industry average, but I believe that is offset by the fact that it trades at less than three times book-value versus the industry average of over four times book-value. It also operates debt free and is one of only a handful of companies in the industry doing so. Insider buying has been prevalent this year and while there are only a handful of analysts following the stock, they are bullish with stock price targets ranging up to $100 per share.


Each of these stocks represents an excellent opportunity for price appreciation in the last half of 2013 if energy becomes the beneficiary of a favorable market rotation from other sectors and the oil boom continues as expected. As with any stock, there is the risk of capital loss; so conduct your own research, and consider speaking with your financial advisor before investing.

Disclosure: I am long HK, GASS, AE. 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.