Chesapeake Energy Corporation (CHK) Still Not A Good Investment

Plains Exploration & Production Company (NYSE:PXP) is up 25% year to date, pushing the stock's P/E up to an industry-high of 34x, primarily due to a buyout offer from Freeport. This appreciation has upped Plains' sales valuation to amongst the industry's most expensive, at a P/S of 2.7x.

Even with its high valuation, Plains may still be a solid investment given its 5-year expected EPS growth rate of 30%, and EBITDA margin of 67%. Steven Cohen and SAC Capital were heavily invested in this stock last quarter (check out all of Steven Cohen's top bets).

Schlumberger Limited (NYSE:SLB), meanwhile, is one of the bigger energy exploration companies with close to a $100 billion market cap. Schlumberger trades in its industry's mid-range at 17x earnings and 2.2x sales. Despite its mediocre valuation, Schlumberger has much better growth prospects; the sell-side expects an EPS CAGR of 18% over the next five years. Billionaire Ken Fisher - founder of Fisher Asset Management and long-time Forbes columnist - is the top fund owner of Schlumberger with over 8 million shares (see Ken Fisher's full portfolio).

Prime competitor EOG Resources, Inc. (NYSE:EOG) is much richer than Schlumberger on a valuation basis at 28x earnings, with a slightly better growth forecast (22% 5-year EPS CAGR). Major positives for EOG include: its industry-high 50% EBITDA margin, and a low debt ratio of 20%. EOG calls mega-hedge fund manager Jim Simons as one of its big-name investors (see all of Jim Simons' top picks).

Last but certainly not least, Marathon Oil Corporation (NYSE:MRO) pays the most robust dividend of the stocks listed here with a 2.2% yield and a 25% payout. Marathon trades even cheaper than Chesapeake on a forward earnings basis at 10x, and almost as low at 1.4x sales. Although this energy company appears cheap, it is for a reason. A 2011 spin-off of refining operations has hurt Marathon Oil's ability to generate strong earnings appreciation. The Street expects it to flirt with 5-6% EPS growth over the next few years, annually speaking. Billionaire Ken Griffin - founder of Citadel Investment Group - is Marathon's top fund investor (check out Ken Griffin's latest picks).

Chesapeake, our stock of focus, still has near term pressures and unsavory debt and cash flow issues that make it a sub-par investment. We believe that the Plains run-up puts the company in overvaluation territory, and EOG does not have the growth to support its valuation. We do like Schlumberger, though, as the top 'growth at a reasonable price' energy play, and Marathon investors can use the stock as an income boost, but shouldn't expect any high-flying fundamentals.

For more energy coverage, continue reading below:

Fundamental Analysis: Chesapeake Energy Corp.

Are hedge funds right on Anadarko

Chesapeake Energy: Poised for a rebound?

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