Pick Up C&J Energy At Just 4 Times Forward Earnings

| About: C&J Energy (CJ)
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I continue to like the energy sector. Valuations are reasonable, oil prices look destined to remain high and the amount of technology needed to get one barrel of oil out of the ground keeps increasing. One energy services stock that has a dirt cheap valuation and good growth prospects is C&J Energy Services (CJES).

"C&J Energy Services, Inc., through its subsidiaries, provides hydraulic fracturing, coiled tubing, and pressure pumping services to oil and natural gas exploration and production companies." (Business Description from Yahoo Finance)

7 reasons CJES is very cheap at under $19 a share:

  • The median price target on the stock by the four analysts that cover it is $29 a share.
  • The stock has easily beat estimates the last two quarters and sells for just over 4 times forward earnings.
  • The median price target for the four analysts that cover the stock is $29, which is 50% above current prices.
  • The stock has underperformed the S&P by around 35% over the past six months. If the company continues to hit numbers and sentiment improves, there should be a good snapback rally in the stock. The stock was near $33 six months ago.
  • The stock looks like it has bottomed near these levels (see chart):

  • It has a dirt cheap five year projected PEG of (.24) and is selling at 6 times operating cash flow.
  • Revenues are growing rapidly. Analysts expect a 20% sales increase between FY2012 and FY2013. Consensus earnings estimates for FY2012 have also risen over the past three months.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CJES over the next 72 hours.