Oil prices have taken a hit and natural gas prices have been in a downward spiral. The energy sector has taken a beating, but that doesn't mean these companies are not going to be profitable. There are companies out there that have been unfairly punished and now might be a great time to start looking into these companies.
The following is a list of six energy stocks that have the potential to double:
ATP Oil & Gas Corporation (ATPG) engages in the acquisition, development, and production of oil and natural gas properties in the Gulf of Mexico, the United Kingdom, and the Dutch sectors of the North Sea.
ATP has had a tough time after the GOM moratorium. The company which had the majority of its drills there has now started to get permits. They are also getting licenses to drill in Israel in order to avoid US government regulation. Insiders have been buying a substantial amount of shares. The stock has a forward P/E of 6.
Chesapeake Energy Corporation (CHK) engages in the acquisition, development, exploration, and production of natural gas and oil properties in the United States.
Chesapeake is a great play on natural gas. The company has done well with finding new opportunities. Not too long ago, it found a new property, the Utica Shale. The CEO has been very excited about this and actually put an estimate of around half a trillion dollars for the reserves. The stock has a forward P/E of 9 and pays a 1.3% dividend.
SandRidge Energy, Inc., (SD) together with its subsidiaries, operates as an independent natural gas and oil company in the United States.
SandRidge has been drilling in areas such as theMississippian Barnett Shale. The company continues to find new properties. Tom Ward, the CEO, has about 23 million shares making him a huge owner in the company. The stock has a forward P/E of 16.
Hercules Offshore, Inc., (HERO) together with its subsidiaries, provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry in the US Gulf of Mexico and internationally.
HERO has had a tough time achieving profitability which dragged the stock down. The company has several assets such as rigs. It is trading at 50% of book value, which makes this stock a nice value play as well.
Clean Energy Fuels Corp., (CLNE) together with its subsidiaries, provides natural gas as an alternative fuel for vehicle fleets in the United States and Canada.
With the current administration pushing clean energy reform, CLNE should do well. The company has over 90 patents and these patents continue to drive its revenue up.
GMX Resources Inc. (GMXR) operates as an independent oil and natural gas exploration and production company primarily in the United States.
The company which is also a Bakken play, is seeing massive increases in production. The property that it has is said to be 90% oil, which will greatly benefit the bottom line. It recently hit a record on its production numbers as well by getting 6.5 Bcfe. The stock has a forward P/E of 11.7.
A major factor every investor should keep in mind about these energy stocks is their debt level. The companies are using debt to grow so some tend to have abnormal debt levels. Also keep a lookout for where the price of oil goes as that will help determine the level of operating margin these companies will see.
Disclosure: I am long ATPG.