The market outlook for the oil and gas sector in 2012 looks very positive. Specifically, natural gas is said to be the prime future prospect of energy. Most of the reserves of natural gas still remain untapped. The five companies I chose for my research are all well equipped with the tools required to deal with natural gas, and have strong assets to enable the exploration and extraction of this resource.
In the following article, I will provide analysis on five oil and gas companies that are primarily involved in activities pertaining to natural gas and that have an attractive current market price.
Questar Corporation (STR) is currently priced at around $19, which is within its 52 week range of $16.36 and $20.17. The company currently has a dividend yield of approximately 3.30%. The stock has shown promising growth of around 12% in the past year, with its current price to book ratio around 3.22. The stock's trailing twelve months price to sales multiple is around 3. Investors should strongly consider this company, which has its core business in natural gas exploration, distribution, acquisition, marketing, and distribution. This stock is especially favorable to those seeking a steady dividend income and appreciation in capital. I recommend this stock as a solid investment opportunity at its current market price.
W&T Offshore, Inc. (WTI) is currently trading at around $24, within its 52 trading range between $11.87 and $29.27. The company focuses on oil and natural gas projects based in the Gulf of Mexico, a key area where many other companies in this sector avoid. The company's earnings per share is around $1.95, whereas its price earnings ratio is 11.70. In my opinion, W&T Offshore, Inc. has strong growth potential due to its optimal utilization of its resources in carrying out its exploration activities in the key area of the Gulf of Mexico.
Furthermore, the stock appears oversold when considering its fundamentals. The company has a market capitalization of $1.71 million, and estimated earnings of around $2.01 for 2012. I recommend purchasing this stock at its current market price.
Southwestern Energy Co. (SWN) engages in the exploration, production, and development of oil and gas as an independent energy company. Southwestern Energy Co. is currently trading at around $35, within its 52 week range of $28.37 and $49.25. It has a price to earnings ratio of 19.74, while its earnings per share stand at around 1.80. Southwestern Energy Co. saw a drop in net income of around 20.65% in the past quarter. However, the company saw an increase in 2011 third quarter net income of $175 million, versus $161 million in 2010 third quarter. In my opinion, Southwestern Energy Co. is oversold, and presents a good investment opportunity at its current levels when considering the fundamentals of the company.
Stone Energy Corp. (SGY) is currently trading near the top of its 52-week range between $14.64 and $35.94, at around $33. With a price to earnings ratio of around 9.38, earnings per share of around $3.46, and market capitalization of $1.59 billion, Stone Energy looks good for purchase at its current market price. When coupled with a good 2012 market outlook for the oil and gas sector, this stock looks even more attractive at its current levels. The company has performed very well in 2011, with revenue growth in the last quarter of 35.6% on a year on year basis, and a whopping 165% increase in earnings growth on a year on year basis. Stone Energy is an excellent buy at its current market price.
Quicksilver Resources Inc. (KWK) engages in exploration, extraction and other activities pertaining to the production of natural gas. Shares are currently trading around $6, between a 52-week range of $4.14 and $15.98. With a market capitalization of $1.02 billion, Quicksilver Resources Inc. has a price to earnings ratio of 2.50, while its earnings per share sits at $2.13. Having a relative strength index below 40, Quicksilver Resources Inc. appears to be oversold, which could garner a pull back sometime this year. Furthermore, the company is planning to reduce its debt through its Quicksilver Production Partners (QPP) IPO offering. At current price levels, I recommend buying Quicksilver Resources Inc. as a solid investment opportunity.