Billionaire Leon Cooperman Still Likes SandRidge Energy Inc. (SD)

We can also compare SandRidge to Devon Energy Corp (NYSE:DVN), EOG Resources Inc (NYSE:EOG), and Apache Corporation (NYSE:APA). Each of these companies is expected to dramatically increase their earnings per share over the next year and a half, though by the end of 2014 their valuations are supposed to be in quite different places. Apache Corporation (NYSE:APA) is the cheapest in forward earnings terms, with a P/E multiple of only 9 on that basis; we’d note, however, that revenue and earnings were both down at double-digit rates in its last quarterly report compared to the first quarter of 2012. Similarly, while Devon Energy Corp (NYSE:DVN) is valued at 11 times forward earnings estimates, recent reports show its sales slipping as well and so investors should be cautious in thinking of it as being likely to deliver the rise in EPS that analysts expect. EOG Resources Inc (NYSE:EOG) has actually been growing rapidly, with net income up over 50% in its most recent quarterly report compared to the same period in the previous year, but the trailing earnings multiple of more than 50 already includes quite a bit of future growth. It would be worth checking in on the company in a few quarters, however, to see if the multiple has fallen enough in light of higher earnings to make the price look more reasonable.

SandRidge is a possible turnaround, but investors should be aware that analysts are expecting net losses next year even as their forecasts for many of its peers are fairly rosy. It certainly seems that those investors who want to invest in a stock tied to natural gas prices might be better served by going long Chesapeake at this time, and should at least wait for SandRidge to start showing operating profits and improvements in its business given that it seems to be dependent on outperforming sell-side forecasts for 2014.

Disclosure: I own no shares of any stocks mentioned in this article.