Anadarko Petroleum
Anadarko Petroleum Corporation (NYSE:APC) has performed exceptionally well over the past year appreciating 30%, 13% year-to-date. I expect Anadarko Petroleum Corporation (NYSE:APC)’s share price to continue to rise due to increased production & rising natural gas prices, which in turn will lead to increased profits. Total production increased 10% last year and is expected to increase going forward. Anadarko Petroleum Corporation (NYSE:APC) plans to spend $5.5 billion on U.S. capital expenditures. While the majority of APC’s revenues come from U.S. operations, they do still have a strong global presence. International production accounted for 27% of total revenues in 2012 and is expected to increase as Anadarko Petroleum Corporation (NYSE:APC) plans to spend $1 billion in capital expenditures on its international operations. The decision to increase international spending has paid off as in 2012 Anadarko made some significant discoveries of oil in Ghana and natural gas in Mozambique.
Trading at $85.87, APC is great value and a strong long-term buy. Anadarko Petroleum Corporation (NYSE:APC) has an inexpensive forward earnings multiple of 16.5 times 2013 earnings plus a PEG ratio of 1.04. APC receives strong analyst coverage with 91% of 32 analysts issuing a BUY rating. The company has the right mix of onshore U.S. developments and foreign exploration projects to continue to thrive. Revenues should increase as well benefiting from profitable new discoveries. Overall, Anadarko Petroleum Corporation (NYSE:APC)’s a great oil play and the added benefit of natural gas exposure is a huge bonus, especially if prices rise.
Range Resources
Range Resources Corp. (NYSE:RRC)‘ stock price has steadily climbed over the past year with shares appreciating +21% year-to-date and +38% the past 12 months. Going forward, there is nothing to doubt that Range Resources Corp. (NYSE:RRC) won’t continue to rise as future production is expected to grow between 20% to 25%. The company’s total resource potential is estimated to be anywhere between 50 to 70 trillion cubic feet. Being a low-cost producer, Range Resources Corp. (NYSE:RRC) should yield exceptional profits from these upbeat production numbers.
The company’s new strategy and focus on per-share growth instead of focusing on growth at all costs will be a big driving going forward and a key factor in surging share prices. With increased production and exports expected to continue to grow, there is little to suggest that Range Resources Corp. (NYSE:RRC)’s stock won’t stop continuing to rise.
Ultra Petroleum
Like Range Resources Corp. (NYSE:RRC), Ultra Petroleum Corp. (NYSE:UPL) is another low-cost producer utilizing a new strategy to increase overall future production. Ultra Petroleum Corp. (NYSE:UPL) now uses their cost position to focus on profitable growth. Ultra Petroleum Corp. (NYSE:UPL) has cut back its capital program to make sure they invest within their cash flow. In doing so, they were able to trim off more than a billion dollars from their capital plans for this year alone. Ultra Petroleum Corp. (NYSE:UPL)’s management team has chosen this strategy to keep the business more efficient and cash flow positive. They want to avoid the possibility of future cash flow problems and believe this new strategy will allow for them to spend only what they can afford. The fiscal belt-tightening has been evidenced by a cut in its capex from $1.56 billion in 2011 to just $415 million this year.
Growth investors will love UPL, it has a lot of potential and can be currently bought for a fraction of its future worth. Ultra Petroleum has robust future projections as they expect that by 2016 they can grow their production 42% while doubling their EBITDA. These conservative projections however only assume a minimal rise in natural gas prices. Many analysts expect natural gas to rise above the $4.50 price that Ultra Petroleum is modeling it to be by 2016. If true, Ultra Petroleum will easily exceed future projections thanks to higher than expected profits. This will have many positive benefits on Ultra Petroleum Corp. (NYSE:UPL)’s overall business. For example, higher cash flows will give the company more capital to reinvest leading to increased long-term growth/production and increased earnings allowing Ultra Petroleum to beat analysts expectations propelling the stock higher.
Bright futures ahead
Investors looking for growth opportunities should love Anadarko Petroleum Corporation (NYSE:APC), Range Resources Corp. (NYSE:RRC), and Ultra Petroleum Corp. (NYSE:UPL). All three companies have bright futures, which should lead to increased stock prices. While I think each stock is fundamentally strong, if I were to pick my favorites I’d say APC is the safest and UPL has the most room to grow.
The article 3 Great Energy Stocks to Buy Now originally appeared on Fool.com and is written by James Hartje.
James Hartje has no position in any stocks mentioned. The Motley Fool recommends Range Resources and Ultra Petroleum. The Motley Fool owns shares of Ultra Petroleum and has the following options: Long Jan 2014 $30 Calls on Ultra Petroleum, Long Jan 2014 $40 Calls on Ultra Petroleum, and Long Jan 2014 $50 Calls on Ultra Petroleum. James is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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