The carnage in the energy sector over the last quarter presents long term value investors with myriad opportunities as the market has thrown out the baby with the bathwater in many cases. One stock that looks ridiculously cheap on future earnings expectations is Carrizo Oil & Gas (CRZO).
Six reasons to pick up Carrizo at under $20 a share:
- The company is aggressively moving to more oil & liquid production. Credit Suisse estimates it will go from a 26% ratio of oil & liquid production in 1Q2012 to 45% in 4Q2012.
- The earnings projections on the company are impressive. CRZO made 98 cents a share in FY2011. However, analysts expect $2.44 a share of EPS in FY2012 before doubling to $4.91 a share in FY2013.
- It is one of the few energy stocks whose consensus estimates for FY2012 and FY2013 have gone up over the past two months. Despite this, the stock has fallen 35% over that time span.
- The stock is selling near the bottom of its five year valuation range based on P/B, P/S and P/CF.
- The 17 analysts that cover the stock have a median price target of $36 a share on CRZO, roughly 80% above the current stock price.
- The stock is selling at a ridiculously cheap 4 times FY2013's projected earnings and has a dirt cheap five year projected PEG (.30) as well.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CRZO over the next 72 hours.