While Apache Corporation (NYSE:APA) did not announce how the cash will be used, the capital provides a cushion if natural gas prices drop. Additionally, with an exceptional book value near its current trading price and a large P/E ratio compared to industry giants, Apache still has room to grow.
Investors looking at energy giants should consider BP plc (ADR) (NYSE:BP) over Exxon. Even though BP’s P/E ratio and EPS is lower, it trades close to its book value. If the energy market crashes, Exxon investors will likely endure a much larger loss — and still not even own shares equivalent to the book value of the firm.
BP plc (ADR) (NYSE:BP) also boasts an enormously high dividend, particularly within the energy sector. And, like Exxon, considering its global operations and the upswing potential for oil and natural gas, BP is ready for additional growth.
Furthermore, the company continues environmental initiatives to earn public trust. For example, BP invested over $25 billion to cover damages and repair the Gulf of Mexico where its 2010 Deepwater Horizon spill occurred. Furthermore, the company expects to invest a minimum of $4 billion in the region for oil development and exploration—indirectly supporting the local economy while expanding its operations.
Why investors should care
WPX Energy, Ultra Petroleum, Apache Corporation (NYSE:APA), and BP plc (ADR) (NYSE:BP) all fit a variety of asset allocations and can be used to achieve different investment goals. But they all boast a common denominator: They’re trading close to or below their book values with growth potential moving forward.
Brendan Marasco has no position in any stocks mentioned. The Motley Fool recommends Ultra Petroleum. The Motley Fool owns shares of Apache and Ultra Petroleum and has the following options: Long Jan 2014 $30 Calls on Ultra Petroleum, Long Jan 2014 $40 Calls on Ultra Petroleum, and Long Jan 2014 $50 Calls on Ultra Petroleum.
The article 4 Firms With Growth Potential Near or Below Book Value originally appeared on Fool.com and is written by Brendan Marasco.
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