5 Potentially Undervalued Energy Stocks For 2012

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 |  Includes: APA, APC, BP, CHK, EOG
by: Kinetic Investments

Many, myself included, are expecting big things out of the energy sector in 2012. I have compiled a short list of stocks in the energy sector including brief business descriptions, percentage below 52 week highs, highest analyst one year price targets, 52 week charts, valuation measures and balance sheets.

1. BP is an international oil and gas company, operating in over 80 countries. It operates two segments: exploration and production, and refining and marketing. It is involved in oil and natural gas exploration, field development and production, midstream transportation, storage and processing, and the marketing/trading of natural gas, including liquefied natural gas. It also supplies, trades, refines, manufactures, markets and transports of crude oil, petroleum and petrochemicals products. The stock currently trades around $43.50, about 11.5% below its 52 week high. The highest analyst one year price target for BP is $55.

52 Week Chart
BP 52 Week ChartClick to enlarge

Key Metrics:

Valuation Measures

Market Cap (intraday):

138.36B

Enterprise Value (Dec 6, 2011):

164.67B

Trailing P/E (ttm, intraday):

6.07

Forward P/E (fye Dec 31, 2012)1:

6.81

PEG Ratio (5 yr expected)1:

1.66

Price/Sales (ttm):

0.38

Price/Book (mrq):

1.26

Enterprise Value/Revenue (ttm):

0.46

Enterprise Value/EBITDA (ttm):

4.12

Click to enlarge

Balance Sheet

Total Cash (mrq):

18.28B

Total Cash Per Share (mrq):

5.79

Total Debt (mrq):

45.28B

Total Debt/Equity (mrq):

41.06

Current Ratio (mrq):

1.15

Book Value Per Share (mrq):

34.58

Click to enlarge

2. Apache Corporation (NYSE:APA) is an independent energy company, which explores for, develops and produces natural gas, crude oil and natural gas liquids. As of December 31, 2010, it had exploration and production interests in seven countries. In addition to its completed wells, several wells had not reached completion: 51 in the United States, seven in Canada, 22 in Egypt, two in Australia, three in the North Sea, and seven in Argentina. A year ago the company completed the acquisitions of Mariner Energy and BP's assets in Egypt’s western desert. The stock currently trades around $96.50, about 28% below its 52 week high. The highest analyst one year price target for APA is $163.

52 Week Chart
APA 52 Week ChartClick to enlarge

Key Metrics:

Valuation Measures

Market Cap (intraday):

37.11B

Enterprise Value (Dec 6, 2011):

43.93B

Trailing P/E (ttm, intraday):

9.40

Forward P/E (fye Dec 31, 2012):

7.88

PEG Ratio (5 yr expected)1:

0.71

Price/Sales (ttm):

2.35

Price/Book (mrq):

1.40

Enterprise Value/Revenue (ttm):

2.77

Enterprise Value/EBITDA (ttm):

3.68

Click to enlarge

Balance Sheet

Market Cap (intraday):

37.11B

Enterprise Value (Dec 6, 2011):

43.93B

Trailing P/E (ttm, intraday):

9.40

Forward P/E (fye Dec 31, 2012):

7.88

PEG Ratio (5 yr expected)1:

0.71

Price/Sales (ttm):

2.35

Price/Book (mrq):

1.40

Enterprise Value/Revenue (ttm):

2.77

Enterprise Value/EBITDA (ttm):

3.68

Click to enlarge

3. Chesapeake Energy Corporation (NYSE:CHK) is a producer of natural gas and oil and natural gas liquids in the United States. As of December 31, 2010, it owned interests in approximately 46,000 producing natural gas and oil wells that produced approximately 3 billion cubic feet of natural gas equivalent (bcfe) per day, 87% of which is natural gas. The Company operates in three segments: exploration and production; marketing, gathering and compression, and service operations, which include its wholly owned drilling and trucking operations. The stock currently trades around $25.25, about 29.5% below its 52 week. The highest analyst one year price target for CHK is $49.

52 Week Chart
CHK 52 Week ChartClick to enlarge

Key Metrics:

Valuation Measures

Market Cap (intraday)5:

16.16B

Enterprise Value (Dec 6, 2011)3:

28.77B

Trailing P/E (ttm, intraday):

12.71

Forward P/E (fye Dec 31, 2012)1:

10.11

PEG Ratio (5 yr expected)1:

0.78

Price/Sales (ttm):

1.48

Price/Book (mrq):

1.22

Enterprise Value/Revenue (ttm)3:

2.64

Enterprise Value/EBITDA (ttm)6:

6.93

Click to enlarge

Balance Sheet

Total Cash (mrq):

111.00M

Total Cash Per Share (mrq):

0.17

Total Debt (mrq):

11.84B

Total Debt/Equity (mrq):

72.62

Current Ratio (mrq):

0.56

Book Value Per Share (mrq):

20.69

Click to enlarge

4. Anadarko Petroleum Corporation (NYSE:APC) is an independent oil and natural gas exploration and production company. As of December 31, 2010, it had 2.4 billion barrels of oil equivalent of proved reserves. Anadarko’s portfolio of assets includes positions in onshore resource plays in the Rocky Mountains region, the southern United States and the Appalachian basin. Anadarko operates in three operating segments: oil and gas exploration and production, midstream, and marketing. parties. The stock currently trades around $81.50, about 4.5% below its 52 week high. The highest analyst one year price target for APC is $128.

52 Week Chart
APC 52 Week ChartClick to enlarge

Key Metrics:

Valuation Measures

Market Cap (intraday):

40.52B

Enterprise Value (Dec 6, 2011):

51.19B

Trailing P/E (ttm, intraday):

N/A

Forward P/E (fye Dec 31, 2012):

23.80

PEG Ratio (5 yr expected)1:

0.95

Price/Sales (ttm):

3.14

Price/Book (mrq):

2.19

Enterprise Value/Revenue (ttm):

3.95

Enterprise Value/EBITDA (ttm):

7.62

Click to enlarge

Balance Sheet

Total Cash (mrq):

3.49B

Total Cash Per Share (mrq):

7.00

Total Debt (mrq):

13.94B

Total Debt/Equity (mrq):

71.47

Current Ratio (mrq):

0.97

Book Value Per Share (mrq):

37.40

Click to enlarge

5. EOG Resources, Inc. (NYSE:EOG), together with its subsidiaries, explores, develops, produces and markets natural gas and crude oil primarily in producing basins in the United States, Canada, The Republic of Trinidad and Tobago (Trinidad), the United Kingdom, and The People's Republic of China. As of December 31, 2010, approximately 82% of EOG's reserves were located in the United States, 11% in Canada and 7% in Trinidad. The stock currently trades around $103.50, about 14.75% below its 52 week high. The highest analyst one year price target for EOG is $152.

52 Week Chart
EOG 52 Week ChartClick to enlarge

Key Metrics:

Valuation Measures

Market Cap (intraday):

27.84B

Enterprise Value (Dec 6, 2011):

31.30B

Trailing P/E (ttm, intraday):

26.54

Forward P/E (fye Dec 31, 2012):

23.47

PEG Ratio (5 yr expected):

0.46

Price/Sales (ttm):

3.38

Price/Book (mrq):

2.20

Enterprise Value/Revenue (ttm):

3.86

Enterprise Value/EBITDA (ttm):

8.33

Click to enlarge

Balance Sheet

Total Cash (mrq):

1.39B

Total Cash Per Share (mrq):

5.16

Total Debt (mrq):

5.23B

Total Debt/Equity (mrq):

41.88

Current Ratio (mrq):

1.40

Book Value Per Share (mrq):

46.47

Click to enlarge

There is no guarantee that any of the above listed stocks will fly or fall next year, but I believe all are worth some consideration for a healthy, well balanced portfolio heading into next year.

Abbreviation guide for the above tables:

K = Thousands; M = Millions; B = Billions
mrq = Most Recent Quarter (as of Sep 30, 2011)
ttm = Trailing Twelve Months (as of Sep 30, 2011)
yoy = Year Over Year (as of Sep 30, 2011)
lfy = Last Fiscal Year (as of Dec 31, 2010)
fye = Fiscal Year Ending



Disclosure: I am long CHK, BP.