2 Energy Firms Make Barron's Top Insider Buy List

Includes: AZUR, WFT
by: Bret Jensen

A little late this week perusing the top 20 list of companies with the most insider buying in this weekend's Barron's. Two interesting energy concerns are within the top 10 of companies with recent insider purchases this week.

Weatherford International (NYSE:WFT) provides equipment and services used in the drilling, evaluation, completion, production, and intervention of oil and natural gas wells worldwide. I last highlighted this oil services firm late last year. The shares have rallied ~40% since then but the stock still looks poised for upside.

An insider must share this view judging by his ~$1.2mm purchase of stock late in September. The company has done a solid job putting it previous accounting and other issues behind it. A settlement for foreign bribery charges should be forthcoming. Weatherford has already reserved some $150mm to cover the settlement which put an end to a scandalous period for the company.

Earnings are recovering rapidly at Weatherford. After posting just 58 cents a share of earnings in FY2012, the company is tracking to more than 80 cents a share in earning this year. The consensus analyst estimate is for earnings to jump some 50% in FY2014 to $1.29 a share.

The company should also benefit from an opening up of the energy industry in Mexico as reforms take hold. The stock sells at 12x forward earnings, a discount to its five year average (15.6). The stock has a minuscule five year projected PEG (.36). Credit Suisse recently upgraded the shares to "Outperform" and raise its price target to $19 a share from $13 a share.

Marlin Midstream Partners (FISH) is a limited partnership that owns and operates midstream energy assets. The company provides natural gas gathering, transportation, treating, and processing services; natural gas liquid transportation services; and crude oil transloading services. Marlin came public in June of this year.

Besides having one of the more interesting ticker symbols in the market, FISH is unusual in that insiders are buying and not selling so soon after its IPO. An insider has bought some $280K worth of shares in three transactions in late September. All purchases were made at slightly higher levels than the current share price of $17.62.

Earnings are marching up nicely. After operating on a breakeven basis in FY2012, the company should post better than 40 cents a share of profit this fiscal year. Analysts have Marlin making just under $1.30 a share in FY2014. They also see better than 50% revenue growth in FY2014.

It should be noted that only two analyst firms (Robert W Baird and Janney Capital) cover the stock as it just came public. Both have positive ratings (Outperform and Buy) on the shares and the two price targets by these analysts are $23 and $23.50 a share, respectfully. Based on its announced quarterly distribution of 35 cents a share, FISH also yields just under 8% at the current stock price.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in FISH 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.

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