Apache Corp (APA)

TheGarcipian (99.04) Submitted: 6/11/08 9:21 PM : Start Price: $138.32 APA Score: -16.68

An oil-n-gas sector play, this stock should be a winner for some time to come. Given the present investing climate of rising oil prices and seemingly insatiable demand for oil, I think this stock, with its very fair PEG ratio of 1.09 and an incredibly low EnterpriseValue-to-EBITDA ratio of only 6, is a bargain right now, with that fact screaming at me just like their Indian namesake. I only wished I'd stumbled across it sooner!

This company has interests in all the right places in the world: Gulf of Mexico, Texas, Australia, the North Sea, Argentina, Egypt, and Western Canada. Projected growth rates for the 1-yr, 3-yr and 5-yr time frames are all double-digits (10.2%, 11.8% and 27.6%, respectively). Their margins are extremely healthy at 30% (Profit) and 51.5% (Operating). Return on Assets is good at 12.9%, but their Return on Equity is excellent at 22.6%. Revenue steadily increased all of last year (2007), rising 50% from the 1st quarter to the 4th quarter -- unbelievable! Apache grew yearly revenue from $8.07B in 2006 to $9.96B in 2007, a 23.4% increase. Very nice. The only question is: can it sustain this growth? With an operating cash flow of $6.42B, I think it can.

But has anyone done a DCF (Discounted Cash Flow) analysis on Apache? If you're willing to share that with me, please post a Reply below. Thanks!

SOURCES: Motley Fool and Yahoo! Finance.

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