kkotwani (99.73)

Best oil gas picks...ATPG and ATLS

November 01, 2009 – Comments (2) | RELATED TICKERS: ATPG , ATLS

I wrote blog on top oil and gas picks in May 2009 titled “Tomorrow's Exxon Mobils”, people were mocking on that post....giving all reasons not to invest in ATLS (ATN) and ATPG. ATPG has almost quadrupled in this time and ATLS has doubled. I should say all those guys missed sweet rides. Recent market correction has brought opportunity to increase holdings in these stocks. Again my recommendations…. don’t miss this opportunity. Let’s see what has changed for these companies in last six months after I wrote that blog.

First ATPG.....three great news for ATPG

1) Discovered approximately 250 net feet of logged hydrocarbon pay in the Gulf of Mexico at its Telemark Hub, an amount that effectively doubles its predrill estimate. Read "5 stocks reaching greatness" by Rich Duprey.

2) Best Patent Award Winner

3) Finalist for Platts 2009 Best Infrastructure Project Award. Results yet to be declared who knows ATPG can be winner too. For finalist list click here.

Most of the time these awards goes to Top Energy companies worth more than 20 billion market cap. ATPG being a small company, making space in these footholds of larger companies. Sales growth in last five 52% and earnings growth at 82%. Estimated earnigs growth for next five years 15%. Estimated EPS for next year $2. My prediction is this stock will be hovering above $60 in one year and this company will be worth more than 20 billion in five years. Recent market correction has brought this stock from $21.5 to $17. I will take it as opportunity to increase my holdings. This stock has second highest proportion in my portfolio after ACAS.

Second ATLS

Last time I wrote pitch for ATN in April 2009 which you can still find as ATN.DL at http://msncaps.fool.com/Ticker/ATN.DL.aspx. ATN ticker got renamed as ATLS after merger. I bought this stock for $13 around that time. Today its trading close to $26. My holding got doubled in just period of six months. At this point it make sense to close this position and book profit. Well, not at all from current valuation perspective it has still lot more room for growth. Moreover, fool founder Rich Smith has given several valuation reasons to buy ATLS in his post "Rocket stock or Dud". His main argument is company’s current reserves value at 2.3 billion USD where as its market value is just short of 1 billion.
There are several other comments in this post where users saying Rich Smith still way short in his valuation. Basically he is considering current price of $2.25 per million BTUs whereas ATLS has already worked out hedges for future contracts at the price of $6 to $7 per million BTUs. Other factors like low cost of production and favorable local prices make this company value at least 3 billion dollar at least even using most conservative estimates.
Recent market correction has brought it from $31.5 to $26…Again Buy, Buy and Buy....