Buy Rising Apache Stock Before 2013

Current shareholders should hold Apache (APA) long-term; interested investors may consider initiating a position around the upcoming earnings release. Apache had declining revenues and earnings in the previous quarter while its rate of overall production continued to increase. Apache is effectively increasing liquids production and benefits from higher commodity prices overseas. Apache recently came to terms for unrelated production and supply agreements while opening a CNG fueling station in Louisiana; Apache also endured minor headwinds that will postpone development in Alaska. Apache faces increased competition on various assets within its worldwide portfolio, but ultimately, it’s successfully positioning itself to benefit handsomely once oil prices stabilize and domestic natural gas prices rebound.

Chevron (CVX), EOG Resources (EOG), Devon Energy (DVN), and Noble Energy (NBL) are the firms most comparable to Apache. Both Apache and Devon Energy’s price is around 10.5 times earnings; EOG Resources and Noble Energy are both over 22 times earnings. Apache’s price is 2.03 times sales and 1.1 times its book value, its price-to-book ratio is the lowest among the firms while only Chevron’s 0.9 price-to-sales ratio is lower than Apache’s. Its annualized dividend is around $0.77 per share. Apache’s current ratio is around 0.9, and its debt-to-equity ratio is around 0.33. Apache’s ROE is around 11.9%, its operating margin is around 37.3%, and its profit margin is around 19.5%.

Apache’s EPS is around $8.35; it increased 35.6% in 2012, and is projected to increase 8.1% in 2013. Apache’s sales have increased 15.2% over the past 5 years, and only EOG’s 20.8% sales growth is higher. To continue reading, click here.

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