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The market in 2014 has awakened somewhat complacent investors to some of the overbought conditions in equities after 2013's ~30% rally. The subsequent pull back in the New Year has also given prudent investors with 'dry powder' in their portfolios for significantly better entry points.

One sector I am allocating some of my available cash to here in this sell-off is the energy sector. The domestic energy boom has been one of the few consistent bright spots in the national economy over the past five years. I also believe we are in the early innings of this development driven by new drilling technologies and massive private investment.

I added to two of my E&P concerns over the past few days. Both are at least 40% under analysts' consensus price targets and also recently received analyst upgrades as well.

Newfield Exploration Company (NYSE:NFX) is an independent energy company that produces natural gas, oil and other liquids. Its main properties include acreage in the Rocky Mountains, Mid-Continent, Malaysia and offshore China. Note: The company is in the process of selling these Asian assets.

The company received a nice upgrade this week from Stifel Nicolaus. The firm's analyst upgraded the shares from "Hold" to "Buy." Among the reasons cited for the upgrade were (1) The stock underperformed the average E&P equity in 2013 significantly, (2) NFX is now well priced relative to 2014 outlook (4.3x EBITDA vs. group at 6.0x) and very attractively priced considering 2015 outlooks (3.9x EBITDA) and (3) The company is growing volumes, NAV, and moving towards FCF (free cash flow) in the coming two years.

Stifel put a $32 share price target on NFX in addition to the upgrade. At ~$24 a share, the stock is trading a third under this price target. Stifel's price target is conservative given the median price target by the 20 analysts that cover the stock is $35 a share. S&P has a $36 share price target on NFX. The shares are selling at just over book value and the company's total enterprise value is less than five times trailing operating cash flow.

Emerald Oil (NYSEMKT:EOX) is a smaller E&P concern that looks attractive after an approximate 15% pull back over the past few months. This fast growing Bakken energy producer has been in my portfolio for two years. It has more than doubled off my cost basis but I am still holding as I believe the stock still has significant upside over the long term.

I am not the only one holding this view. Global Hunter upgraded the shares from "Accumulate" to "Buy" in January. Hunter's analyst was impressed with the price that the company recently picked up an additional ~21,000 acres in the Bakken. He raised his price target to $12 a share from $10 previously. This is substantially above the current price on Emerald of just over $7 a share.

Other analysts are equally bullish. The nine analysts that cover the stock have an $11 a share median price target on Emerald. The company is tracking to over 80% revenue growth in FY2013 and analysts project sales will more than double in FY2014. More importantly, after posting losses as it grew production over the past few years; expectations are for Emerald to post a profit of a ~quarter a share in 2014.

Disclosure: I am long EOX, NFX. 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.

Source: 2 Energy Concerns Around 40% Below Analyst Price Targets