Halcon Resources Corp (HK), SandRidge Energy Inc. (SD) & WPX Energy Inc (WPX): 3 Energy Producers to Buy on the Next Taper Tantrum

Page 1 of 2

Halcon Resources CorpAs the Federal Reserve hints at tapering the bond buying program over the next year, cyclical stocks including energy exploration and production firms should become interesting buys. These stocks have underperformed the market rally over the last year as investors have piled into high yielding stocks as bond yields hit extremely low levels. Now that money should flood out of those stocks and bonds into growth stocks.

The main reason the Fed would stop bond buying would be a generally stronger economy, a situation that should benefit energy stocks that have underperformed. One group that should outperform in this rotation of money into growth stocks includes Halcon Resources Corp (NYSE:HK), SandRidge Energy Inc. (NYSE:SD), and WPX Energy Inc (NYSE:WPX) . These beaten down stocks not only offer the ability to rebound off weak trading, but the businesses could improve as economies around the world rebound sending oil and natural gas prices higher. Compared to the tech stocks previously covered, these stocks offer a riskier proposition as weak natural gas prices could hold the stocks down even during an economic recovery.

As the chart below shows, these stocks with the exception of WPX have dramatically under performed the market over the last year:

HK Total Return Price data by YCharts

Experienced management

Halcon Resources Corp (NYSE:HK) counts one of the most successful management teams in the energy sector. CEO Floyd Wilson is well known for selling PetroHawk Energy to BHP Billiton Limited (ADR) (NYSE:BHP) near the top in the natural gas market back in 2011. After a few years, he has developed Halcon into a player in the Bakken, Eagle Ford, and Utica shale areas while the market has lost interest in energy producers. With a group of investors he bought RAM Energy in February 2012, but energy exploration and production firms have been out of favor during this period.

Analysts actually expect the company to earn around $0.65 next year making the stock attractive around $5.50. Naturally the level of earnings will ultimately depend on the price of oil and natural gas in 2014, but investors could do worse than bet on a leading CEO in the industry.

The company currently operates 17 rigs across its holdings and is producing 30,000 barrels of oil equivalent per day with 27 wells being completed or waiting on completion. The majority of the rigs are working in the Williston Basin and the El Halcon Resources Corp (NYSE:HK) portion of the Eagle Ford. Due to an aggressive acreage acquisition plan, analysts expect revenue to surge from $247 million in 2012 to an incredible $1.6 billion in 2014. With the stock down 47% in the last year, this aggressive growth plan has not benefited shareholders.

New management

SandRidge Energy Inc. (NYSE:SD) has been universally hammered, as investors were frustrated with the constant shifts in strategy by the previous CEO. Tom Ward was forced out a few weeks back yet the stock trades near the all time lows below $5. In addition, the company hired a new CFO less than a week after changing the CEO. The key to the stock will be whether the new executives are able to turn the company around with a consistent plan that the investment community understands.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!