Why This Small Energy Producer Is Going Much Higher

| About: Endeavour International (END)

Endeavour International (NYSE:END) has moved up some since I recommended and bought it at just over $11 a share in late February and currently sits at around $12.50 a share as of Monday's close. The stock is due to report soon and it has picked up some positive catalysts that I think will accelerate the stock even higher in the short to medium term.

Positive events/catalysts for Endeavour:

  • A beneficial owner snapped up more than $1.5mm in new shares in April.
  • It announced the first production at its Bacchus Development. The first well produced a solid 6,000 B/D in the first five days of production. Endeavour owns 30% of the production from this well which is operated by Apache (NYSE:APA).
  • Consensus earnings estimates have gone up substantially over the past two months for FY2012 and FY2013.

Endeavour International - "Endeavour International Corporation, an independent oil and gas company, engages in the acquisition, development, exploration, and production of crude oil and natural gas". (Business Description from Yahoo Finance)

4 additional reasons Endeavour has substantial upside from just under $13 a share:

  • The stock is selling for less than 4 times expected FY2013's earnings. This compares to five year historical average on forward PE for END of 28.6.
  • Revenues are set to explode. The company booked just over $60mm in sales in FY2011. However, analysts expects over $400mm in revenue in FY2012 and over $680mm in FY2013.
  • The 7 analysts that cover the stock have a median price target of $16.50 a share on Endeavour. I believe these price targets will turn out to be substantially on the low end if Endeavour continues to meet its production targets.
  • The company is expected to go from a loss of $1.41 a share in FY2011 to a gain of just over $2 in FY2012. In FY2013, analysts have EPS coming in at $3.39 a share.

Disclosure: I am long APA, END.