SandRidge Energy (SD) Gets Downgrade But Is Still A Buy

Occidental Petroleum Corporation (NYSE:OXY) is the largest integrated oil and gas company listed at a $60 billion market value. On a valuation basis, Occidental is very attractive, trading at a cheap P/E of 11x. Although Occidental might be too large to boast some of the higher growth opportunities provided by small-cap explorers, it does have the lowest debt ratio of the five stocks listed, at 11%. A subsidiary of billionaire Steven Cohen’s SAC Capital upped its stake 250% last quarter (check out Steven Cohen’s newest picks).

Energen Corporation (NYSE:EGN), meanwhile, is a solid small-cap oil/gas explorer that also pays a 1.3% dividend yield. The stock trades at only 11x forward earnings, compared to 16x on a trailing basis, but also trades the cheapest – besides SandRidge – on a P/S basis (2.2x). Billionaire Jim Simons dumped almost 80% of its stake last quarter (see Jim Simons’ top picks).

Laredo Petroleum Holdings Inc (NYSE:LPI) is the most expensive oil/gas stock listed on a P/E basis at 45x trailing earnings and 21x forward earnings. With this high valuation does come high growth – 25% expected earnings growth over the next five years (annually). We still remain cautious given the energy company has an elevated debt ratio of 45%, the highest of our players listed here. Billionaire Ken Griffin – founder of Citadel Investment Group – dumped of all his shares last quarter (check out Ken Griffin’s newest picks).

Concho Resources Inc. (NYSE:CXO) operates in Texas and Mexico and promises investors solid growth with 14% 5-year expected earnings CAGR. The oil/gas company is down over 15% year to date after having missed earnings estimates each of the last four quarters. Even after the pressure, Concho still trades richly at 30x earnings and 4.4x sales. Concho saw billionaire George Soros dumping its entire stake last quarter (check out George Soros’ top picks).

In short, we believe that SandRidge is an interesting turnaround story that may remain weak in the near-term, but enough pressure from activist investors should unlock shareholder value in the interim. Check out some other coverage of these issues below:

SandRidge Is One Of 6 Stocks Short Sellers Don’t Believe In

Read TPG-Axon’s Other News Stories

Read Our Previous Analysis About SandRidge