This Small Cap E&P Concern Is A Solid Growth Play

| About: Carrizo Oil (CRZO)
This article is now exclusive for PRO subscribers.

Carrizo Oil & Gas, Inc. (NASDAQ:CRZO) certainly has had a busy week, as we shall see below. This fast growing oil & gas producer should be firmly now on the radar for aggressive growth investors, as it is impressively ramping up production.

Positives this week for Carrizo:

  • The company just provided its average daily production at 8,600 barrels/d in the third quarter, topping the previous guidance of 8,200 barrels/d.
  • It was just announced that the company will join the SmallCap 600 Index.
  • It successfully raised $82.5mm by selling a 30% stake in its Colorado shale acreage to Oil India.
  • A Chinese oil firm paid $27.5mm for a 10% stake to the same Colorado field this week.

Carrizo Oil & Gas is an independent energy company that produces oil & gas from properties in the United States and the United Kingdom.

4 reasons Carrizo is a solid growth play at $26 a share:

  1. Earnings are ramping up exponentially. The company made just under $1 a share in FY2011, but is on track for approximately $1.75 in earnings per share in FY2012. Consensus for FY2013 is for earnings to more than double to over $3.70 a share.
  2. The stock is selling in the bottom third of its five-year valuation range based on P/B, P/S and P/CF.
  3. Revenues are expected to be up more than 60% in both FY2012 and FY2013, as the company increases production. The stock sports a five-year projected PEG of under 1 (.59).
  4. The mean analysts' price target held by the 15 analysts on CRZO is just over $34 a share.

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