CNBC provided its monthly slideshow this morning highlighting the 20 stocks that have the most potential to pop based on analysts' price targets. The #1 stock with the potential to pop using this criteria was Denbury Resources (DNR), which has been a core holding of mine for a while and is just starting to move up.
6 reasons Denbury is significantly undervalued at under $15 a share:
- The median analysts' price target on Denbury is $25 by the 17 analysts that cover the stock, 60% above current prices. Wunderlich initiated the shares as a "Buy" in June as well.
- The company has easily beat earnings estimates each of the past four quarters. The average beat over consensus during that time span has been 20%.
- Denbury has grown revenues at an average 20% annual clip over the past five years and has a low five year projected PEG (.51).
- The company more than doubled operating cash flow from FY2009 to FY2011 and DNR sells at just a little over 4 times operating cash flow.
- The stock is selling at the bottom of its five year valuation range based on P/E, P/B, P/S and P/CF.
- The stock is selling at just over 10 times forward earnings (Five year average: 19.7), 17% over book value and 93% of its production in the first quarter was oil based. It also has 200,000 acres in the Bakken reserves and has grown production at an incredible 30% annual rate over the past dozen years.
Disclosure: I am long DNR.