2012 FIVE ENERGY STOCKS

The energy sector has long been a popular area for investment. From oil companies in Texas and Oklahoma to solar enterprises in California, energy has been the source of big profits for many people. In spite of the market pressures that exist today, this is still a very good place to invest, and smart investors are doing well. Among the multitude of possibilities that exist on Wall Street, five must-own energy stocks are Quicksilver Resources Inc (KWK), Southwestern Energy Co (SWN), Anadarko Petroleum Corp, (APC) Suncor Energy Inc (SU) and Chesapeake Energy Corp. (CHK)
Quicksilver Resources Inc
Specializing in the exploration, production and sale of natural gas and oil in the United States and Canada, Texas-based Quicksilver Resources Inc. has nearly 25 years of experience in the energy sector. The company has a market cap of $938.16 million, and is currently trading near the bottom of its 52-week range of $5.48 to $15.98. Now around $5.50, the company is expecting a share price increase this year, with its one-year target of $8.75 representing an increase of nearly 60%.
Although some indicators (such as its levered free cash flow of -441.01 million) point to Quicksilver as a questionable investment, a number of analysts are starting to see the potential of this small-cap. With several new properties to develop, interest in KWK is rising, with trade volume increasing by 10% over the past 10 days. The Quicksilver share price has pushed below its Price/Book valuation and is trading well below its moving averages, leading many to believe it is getting ready to climb.
Southwestern Energy Co
Southwestern Energy is another company that looks prepared for a breakout. This $10.31 billion Texas company specializes on oil and natural gas reserves in the United States. At $29.68, the company is trading near the bottom of its $28.72 to $49.25 range, although it is aiming at a one-year estimate target of $41.54. Like Quicksilver, SWN is trading below both its 50-day ($33.81) and its 200-day ($38.27) moving averages.
At -532.31 million in levered free cash flow, the company is stretched thin, but back itself up with a return on assets of 10.10% and a return on equity of 19.38%. The company's trailing P/E of 16.49 and its forward P/E of 16.13 are virtually identical, suggesting stability going forward. In spite of the projections, it is difficult to get behind a cash-tight oil & gas when there is an overabundance of natural gas reserves. Holding on any existing positions is probably best at the moment, as investors wait to see if the share price can resume itself and start climbing again.
Anadarko Petroleum Corp
Anadarko Petroleum is another oil & gas company that has been on a wild ride. Trading within a huge 52-week range, ($57.11 to $85.50) this $39.96 billion market cap company from The Woodlands, TX appears poised to take another big leap this year and blow past its $85.50 high. Possessing very solid numbers, this appears to be an excellent time to consider taking a position in APC.
Anadarko stock surged past both its 50-day and 200-day moving averages, making a share price increase from its current $80 range toward its one-year target of $100.15 seem believable. With market stability in the Middle East a concern due to the nuclear conflict with Iran, reports of oil abundance in the United States could help increase demand for domestic crude. With a hefty forward P/E of 23.67, picking up some shares of APC at its current range would likely be a very smart move.
Suncor Energy Inc
Canadian oil& gas company Suncor is another must-own energy stock for 2012. The company is not only a producer, but it also has refinery operations throughout the country. With a market cap of $52.78 billion and a 52-week price range of $22.55 to $48.53, a dividend of $0.43 and a yield of 1.40%, the company looks prepared to offer more returns to investors this year.
Trading between its 200-day and 50-day averages, SU is looking at a forward P/E of 10.10. The company has a five-year growth estimate of 13.40%, which nearly mirrors its 13.80% trailing numbers. Analysts largely agree that SU is a buy, an opinion enforced by the fact that some believe Suncor Energy is undervalued by 46% or more. This potential for growth should have investors who want to add an energy stock ready to take a serious look at buying SU.
Chesapeake Energy Corp
Oklahoma-based Chesapeake Energy, a Pickens stock pick, is another company that investors should consider adding to their portfolios. With US properties in the South and West, the $13.72 billion company has the size and holdings to make it very attractive to many people. Although low prices for natural gas have affected the company's share price and cash flow, (trading near its 52-week low and leaving -9.83 billion in levered free cash flow) many are expecting great things for this company.
After setting a new 52-week low of $20.80 in mid-January, (CHK's range is $20.80 to $35.95) its $34.05 one-year target estimate has it challenging the top end before the end of the year. A number of investors have also noticed; speculators have placed a large number of $35/$45 strike calls for January 2013. This increased interest, coupled with its year-to-year quarterly revenue growth of 54.10, makes purchasing CHK at this time appear to be a solid move.
Picking up Must-own Energy Stocks
Although it has not been easy for many energy companies, now is a great time to consider positions in a number of companies. With impressive potential gains and solid statistics, Quicksilver Resources Inc, Southwestern Energy Co, Anadarko Petroleum Corp, Suncor Energy Inc and Chesapeake Energy Corp all look like companies that investors should consider adding to their portfolios.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.