5 Best Energy
Stocks of the Week
This Week in Energy
• US production still
increasing, gasoline
stockpiles high
• Libya exports coming
back online
• Concer...
This Week’s Top 5 Energy Performers
NYSE: PE up 4.95%
NASDAQ: AHGP up 3.88%
NASDAQ: MRD up 3.84%
NYSE: CXO up 3.82%
NYSE: ...
Parsley Energy
Why is it up this Week?
• After its Initial public offering back in May,
several analyst groups initiated c...
Parsley Energy
Who is it?
Parsley is a exploration & production company in the
heart of the Permian Basin
Pros:
• Location...
Parsley Energy
Does this week matter in the big picture?
Price targets and analyst opinions won’t
change this business, no...
Alliance Holdings GP
Why is it up this Week?
• Analysts at Raymond James seem to really
like this coal stock, giving it a ...
Alliance Holdings GP
Who is it?
General Partner of Alliance Natural Resource Partners, just about the only coal
company in...
Alliance Holdings GP
Does this week matter in the big picture?
Price targets and analyst opinions don’t
really mean much, ...
Memorial Resource Development
Why is it up this Week?
• After its Initial public offering back in June,
several analyst gr...
Memorial Resource Development
Who is it?
General Partner of Memorial Production Partners, a Natural Gas producer with
acre...
Memorial Resource Development
Does this week matter in the big picture?
Price targets and analyst opinions won’t
change th...
Concho Resources
Why is it up this Week?
• Several Analysts have increased their 2014
earnings estimates for Concho thanks...
Concho Resources
Who is it?
Exploration & Production company focused solely on the Permian Basin
Pros:
• Strong acreage po...
Concho Resources
Does this week matter in the big picture?
Increased production leading to better than
expected earnings i...
Susser Petroleum Partners
Why is it up this Week?
• Ummm…good question
– No press releases, no analyst rating changes, no
...
Susser Petroleum Partners
Who is it?
A Master Limited Partnership specializing in wholesale distribution of refined
petrol...
Susser Petroleum Partners
Does this week matter in the big picture?
Nothing happened. So how can that have any
tangible im...
How You Can Profit from
America’s Energy Tax
“Loophole”…
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5 best energy stocks july 11

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5 best energy stocks july 11

  1. 1. 5 Best Energy Stocks of the Week
  2. 2. This Week in Energy • US production still increasing, gasoline stockpiles high • Libya exports coming back online • Concerns over losing Iraqi production waning Energy sector down 1.85%: Global oil supplies are on the rise, sending prices lower
  3. 3. This Week’s Top 5 Energy Performers NYSE: PE up 4.95% NASDAQ: AHGP up 3.88% NASDAQ: MRD up 3.84% NYSE: CXO up 3.82% NYSE: SUSP up 3.48%
  4. 4. Parsley Energy Why is it up this Week? • After its Initial public offering back in May, several analyst groups initiated coverage this week. Most of which is favorable –Most Recent: RBC Capital rating of sector perform with a very favorable price target
  5. 5. Parsley Energy Who is it? Parsley is a exploration & production company in the heart of the Permian Basin Pros: • Location, the Permian is a great place to be right now • Lots of potential well sites to grow production Cons: • Only getting 53% oil in production, low compared to other Permian players • Priced at extremely high premium (TEV/EBITDA= 23.9x)
  6. 6. Parsley Energy Does this week matter in the big picture? Price targets and analyst opinions won’t change this business, nor the long term outlook for this stock What really matters right now is whether the company can grow production, so watch for earnings reports and conference calls to get a better picture of guidance
  7. 7. Alliance Holdings GP Why is it up this Week? • Analysts at Raymond James seem to really like this coal stock, giving it a strong buy rating and a price target of $77.00 – Price as of end of week: $68.87
  8. 8. Alliance Holdings GP Who is it? General Partner of Alliance Natural Resource Partners, just about the only coal company in America that is actually making money today Pros: • Reducing costs while increasing production • Squeaky clean balance sheet • Raising distributions Cons: • Coal is a tough place to be, coal prices are weak from oversupply • Long term outlook for coal in US in decline
  9. 9. Alliance Holdings GP Does this week matter in the big picture? Price targets and analyst opinions don’t really mean much, but… ARLP is slowly gaining market share thanks to its low cost production in the Illinois Basin region, which is leading to higher distribution payments at the General Partner
  10. 10. Memorial Resource Development Why is it up this Week? • After its Initial public offering back in June, several analyst groups have initiated coverage with strong buys
  11. 11. Memorial Resource Development Who is it? General Partner of Memorial Production Partners, a Natural Gas producer with acreage in the Rockies, East Texas, and Louisiana Pros: • Lots of room to grow production (up 54% since Q1 2012) • E. Texas & Louisiana acreage in region with high demand & lots of infrastructure to get it to market Cons: • 1 year decline rates very high (approx. 65%), very challenging for E&P company structured as a MLP
  12. 12. Memorial Resource Development Does this week matter in the big picture? Price targets and analyst opinions won’t change this business, nor the long term outlook for this stock Investors in this company need to worry more about company growing production to cover its high decline rates and that the MLP can cover its distributions
  13. 13. Concho Resources Why is it up this Week? • Several Analysts have increased their 2014 earnings estimates for Concho thanks to better than expected production growth –Earnings for FY 2014 increased from $4.31 to $4.35 per share
  14. 14. Concho Resources Who is it? Exploration & Production company focused solely on the Permian Basin Pros: • Strong acreage position in one of US’ best shale formations • Production growing fast (up 23% y-o-y) • Strong cash operations compared to many small E&P companies (operational cash flow covers 80% of capital expenditures) Cons: • High premium for shares (P/E ratio of 49.3x) • High level of debt (debt/capital =49.4%)
  15. 15. Concho Resources Does this week matter in the big picture? Increased production leading to better than expected earnings is a good sign What really matters for Conch in the future is to be able to cover its capital expenditures with cash flow from operations
  16. 16. Susser Petroleum Partners Why is it up this Week? • Ummm…good question – No press releases, no analyst rating changes, no tangible changes to the business – Somebody might give some technical analysis explanation, but it’s just up, end of story.
  17. 17. Susser Petroleum Partners Who is it? A Master Limited Partnership specializing in wholesale distribution of refined petroleum products, mostly supplying retail stations owned by Susser Holdings Pros: • Long term fee based contracts provide stable cash flows • Strong distribution coverage (coverage ratio= 1.22x) • Well financed General Partner (Energy Transfer Partners) Cons: • Very low margin business (gross margin 1.4%) • Priced pretty high for MLP (price/distributable cash flow=19.46x)
  18. 18. Susser Petroleum Partners Does this week matter in the big picture? Nothing happened. So how can that have any tangible impact on the long-term impact of the company?
  19. 19. How You Can Profit from America’s Energy Tax “Loophole”…
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