5 Oil And Gas Stocks To Buy In 2012

Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

2012 has seen a crest of sorts already in energy stocks.  Natural gas prices have seen a downtrend over the past two decades.  These companies offer some relief by way of promising profits by 2013.  Weigh what you read here with what you know and feel and, certainly, you will figure out whether these stocks will move from your watch list to your portfolio.

EOG Resources Inc. (NYSE: EOG): With its market capitalization of $27.45 billion, its earnings per share at $3.90 and price to earnings ratio of 26.19, this share is priced at about $ 102.19.  As per its most recent information for the fiscal year ending December 31st, 2011, its profit margin was 12.63% and revenue per share $31.31.  Deutsche Bank upgraded EOG Resources Inc. from a hold to a buy.  The growth estimated for this year is an impressive 281.5%. In the opinion of 24 brokers, this share is a medium buy.  Its competitor, Sonde Resources Corp. (SOQ) sells shares at $2.77, its market capitalization is $172.57 million, earnings per share is negative 1.26.  This surely shows EOG Resources up in an even better light.

Devon Energy Corporation (NYSE: DVN)Expect to pay around $62 per share.  This company has a market cap of $25.27 billion.  It has a 1% dividend yield, price earnings ratio of 5.55 and earnings per share of $11.27.  Its growth estimate for the year is a sad red figure reading 7.7%, yes, negative.  Its profit margin was reported as 47.21%, but its quarterly earnings growth was a dismal -50.3%.  There is good news here and reason for optimism: according to analyst estimates, revenue will go up by $ .5 billion by the end of this year, so, assuming they keep their costs down, their profits will rise.  And the “sad red figure” of its growth estimate is expected to change to a nice plus 12.40% in the next year. Devon announced a $2.2 billion deal on five new venture plays with Sinopec (SHI).  Apart from this, the company was upgraded from Market Perform to Outperform at Raymond James, and from Sell to Hold at ISI Group, all boding well for the company.  Does this inspire the bullishness in you on this stock?  It does in me!

Chesapeake Energy Corporation (NYSE: CHK)You shell out $22.17 for this share which will yield you a dividend of 1.50%, its earnings per share being $1.99, with a price to earnings ratio of 10.99.   The star analysts predict a revenue of $13.6 billion in the coming year and a sales growth of 13.20%.  Growth estimate is -4.4% this year and further going down to -16.70%.  Not so nice.  Its revenue was $10.88 billion and a revenue per share of $17.15.  Its quarterly earnings growth was 65.2%.  I wouldn’t touch this stock with a bargepole because the growth projections matter to me, though the price is right compared to its more pricey contemporaries.  Analysts however, beg to differ from me.  They rate it pretty close to the companies previously mentioned.  Maybe they are heartened by recent news that Chesapeake  will be the second in line to benefit most from the very viable Utica Shale, having good acreage in the play.  If you are similarly excited by this news and its potential effects on the company’s profit margin, don’t let us rain on your parade.

Apache Corporation (NYSE: APA):  Cost of one share $92 or so. With a market capitalization of $35.5 billion, an earnings per share of $10.28 and price earnings ratio of 8.98, this company comes across as being sound, despite its low dividend yield of .60%.  But we’re talking profits here, so let’s take stock of those figures: its profit margin was 25.76% and revenue per share $41.51.  Quarterly earnings growth was 28.80%.  As per analyst estimates, revenue will be $18.36 billion and the growth in the coming year will be 4.3%, down from the previous which was 33%...surely sufficient to give one pause and ask why?  Sales growth is also predicted to drop, so this company had better watch expenditure vigilantly in order to be profitable.  Analysts have faith in Apache Corporation apparently: it is rated as quite a strong buy.  The latest news that boded well for Apache was when corporate insiders were tracked and this company showed up on the top of their list of favorites.  Now this is big. The corporate insiders know companies really well.  This is why many investors mimic their actions.  And one insider during the past month has bought shares of Apache.  Will you be following suit?

Anadarko Petroleum Corporation (NYSE: APC)This company recently signed an agreement with FMC Technologies (FTI) for the provision of subsea systems and life-of-field services for the Lucius project.  Anadarko is the biggest independent operator in the Gulf of Mexico.  $78.28 is what you would pay for this share which has a market cap of $38.98 billion and an earnings per share of -4.38.  Red flags right off the bat. But just as every human being should be given a chance, we don’t write off stocks too fast either…who know what could happen?  Upon delving some more, we see a .50% dividend yield, its profit margin was -16.80%...so what happened to its revenue of $12.98 billion?  This doesn’t truly evoke my confidence and trust.  Let’s check in with our trusty analysts: they estimate growth to drop from 73.1% this year to 7.3% in the next.  They also call it quite a strong buy and figure its price might go up to $128.  So, yes, if anyone was to buy now and that eventuality did occur, they would profit.

By 2013, yes, any of these could turn up some impressive profit figures: it is up to you to figure out which, based on the facts mentioned.  Do recall, chance plays a role, so add in some prayers as well!  May good fortune follow all these companies and you!


The Motley Fool owns shares of Devon Energy. Vatalyst has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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