Halcón Resources (HK) has been in the news lately as a result of substantial secondary offering pricing the shares at $7 a share. Now that this event has been completed, it might be time to take a hard look at the stock. It has explosive revenue growth coming its way due to expanding production as well as a merger, strong management and recent insider buying. It also has not had the same run up as about every other commodity stock recently.
"Halcón Resources Corporation is an independent energy company, engages in the acquisition, production, exploration, and development of onshore oil and natural gas properties in the United States." (Business description from Yahoo Finance)
7 reasons to buy HK at $7.50 a share:
- Insiders have bought almost $1.5mm in new shares since early August.
- Revenues will more than double this year to over $200mm. Analysts expect sales to more than tripled next year to over $700mm as impacts from recent merger play through.
- The company is run by Petrohawk's former CEO, who built that company up to $12B market value when it was sold to BHP Billiton (BHP).
- The company should run 75% oil & liquids production and just 25% natural gas for FY2012.
- It has a solid balance sheet with net cash on the books. The stock also sells for less than 18 times forward earnings, a discount to its five year average (28.7).
- The seven analysts that cover the stock has a median analysts' price target of $12 a share. Targets range from $10 to $16 a share.
- The company has beat earnings estimates three out of the last four quarters. The average beat over consensus during that time span has been 25%.