Billionaire T. Boone Pickens’s High Upside Potential Picks Include Phillips 66 (PSX)

Pickens cut his stake in Anadarko Petroleum Corporation (NYSE:APC), but still owned 45,000 shares per the filing. The independent oil and gas company experienced a steep drop in net income in its most recent quarter compared to the same period in the previous year, but analysts apparently expect it to rebound: the forward P/E is 16, with the five-year PEG ratio being 0.9. It is the case that Anadarko Petroleum Corporation (NYSE:APC) delivered an increase in sales over the same time frame, but we still think that we would avoid the stock for now.

Rounding out our list of Pickens’s high upside potential picks is oil and gas exploration and production company Halcon Resources Corp (NYSE:HK). Halcon’s adjusted earnings numbers have been very low on a trailing basis, but analysts expect them to improve to 31 cents per share this year and 64 cents per share in 2014. That makes for a forward P/E of 9, and looking at further projections the result is a PEG ratio well below 1. However, the stock is down 41% in the last year and the most recent data show that 16% of the float is held short.

Halcon Resources Corp (NYSE:HK) therefore seems like a risky pick at least at this time, and we might want to hold off until we see how much progress the company is making towards hitting analyst targets. The downstream oil and gas companies are certainly cheap in earnings terms, and we’d be quite interested in learning more about them in search of good value prospects with at least some growth potential as well.

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