Just as natural gas stocks aren't getting multiples worth jack, oil companies are finally getting their due, particularly if they are U.S.-based.
There are five oil producers that are, basically, the best growth stories that I follow. All are fairly speculative on the surface, meaning they can get hammered on every couple-of-dollar downticks in futures. But all five are replacing much more than they are pumping and they are finding oil in cheap places and selling them in high ones.
First, the two big dogs: Apache (APA), which is owned by Action Alerts PLUS, and Anadarko (APC) represent the two best oil growth stories globally. They are fantastic producers and have been terrific dealmakers. If oil stays up here, they will be ridiculously undervalued even as they are each worth about $40 billion. Keep track of Anadarko's find off Mozambique and West Africa. They could be HUGE!
Next would be a hybrid domestic and international play, Noble Energy (NBL), which was upgraded by Goldman Sachs this morning. This company is mostly domestic but it does have a gigantic natural gas field -- one of the largest in the world -- off the coast of Israel. Given how expensive natural gas is "over there," that's a very big call on the future of nat gas.
Finally, there are the two domestic plays that should have been bought by majors a long time ago: EOG Resources (EOG) and Continental Resources (CLR), both with respective exposures to the Eagle Ford and Bakken shale plays. At $30 billion and $18 billion, they are no longer small-caps, but their reserves are gigantic and their finding costs incredibly low.
Again, if oil stays up here, these are winners. If it does down to $90, they are terrific opportunities as they are worth a lot more in the private market than they are to the public markets.
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