Billionaire Steve Cohen’s Big Bet On Oil & Gas: Forest Oil Corporation (FST)

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Although earnings are expected to remain below 2011 levels, when coupling its EPS with the industry average price to earnings the stock could well be undervalued. The industry average P/E multiple is around 30 times; put that multiple up against the 2013 expected EPS (Wall Street estimates) of $0.38 and the company shows over 60% upside. Furthermore, the industry trades at an average 8.8 price to operating cash flow multiple, whereas Forest Oil is at 2.5 times. It appears that concerns surrounding high leverage and over-exposure to natural gas are both being addressed by Forest Oil, and so some of the pressure on the stock might be overdone. Cohen is now one of the Forest’s top fund owners, topping Owl Creek Asset Management, which owned 9.8 million shares at quarter end (see all the hedge funds loving Forest Oil).

The article Billionaire Steve Cohen’s Big Bet On Oil & Gas originally appeared on Fool.com and is written by Marshall Hargrave.

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