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Shares of buy-recommended XTO Energy (XTO) offer appreciation potential of 17% to estimated net present value [NPV] of $52 a share. NPV presumes a long-term natural gas price of $10 per million btu, as opposed to the current six-year quote of about $8.50. The clean heating natural gas equivalent of current six-year oil futures is more than $14 a million btu. To no surprise, XTO’s cash flow per unit of production tracks natural gas price in a chart that takes account of second quarter 2006 results released on July 25. More impressive, XTO continues to deliver volume growth adjusted for debt and shares of more than 4% a quarter. Present value analysis characteristically understates the worth of the superior performance management has achieved.

Source: XTO Energy: Growth Standout