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Canadian Natural Resources (NYSE:CNQ) has had a challenging six months as the stock is down some 30% from its highs earlier in the year, mainly due to low natural gas prices. However, positives are mounting and this cheap, large Canadian energy concern looks like it has bottomed and is heading higher.

Here are some recent positives for CNQ:

  • After hitting a 10-year low of just over $2/mmbtu earlier in the year, natural gas prices have risen nicely and are approaching $3.50/mmbtu (over 60% of CNQ's production is NG).
  • The Street upgraded the stock from a "hold" to a "buy" in early September.
  • After falling for months, consensus earnings estimates for both FY 2012 and FY 2013 have ticked up in the last week.
  • Technically, the stock looks like it has bottomed. It is now solidly above its 100-day moving average, and it has also been consistently hitting higher lows recently (see chart).

Click to enlarge image.

Here are four reasons to buy CNQ at just over $31 a share:

  1. The company is rapidly expanding its oil production (up 17% to 22% projected for FY 2012) while holding NG production flat to slightly down. One of the key reasons: Analysts expect 12% revenue growth in FY 2013 after around 6% sales increases this fiscal year.
  2. The stock is selling in the bottom quarter of its five-year valuation range based on P/E, P/B, P/CF, and P/S.
  3. The stock is cheap at just over five times operating cash flow and is committed to substantially increasing dividends in coming years according to its latest investor presentation. It currently yields 1.4%.
  4. The median price target by the 11 analysts who cover the stock is $40 a share.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CNQ over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.