Talisman: Martin Schulz, an energy analyst with National City Asset Management, says he's been looking closely at Canadian oil and gas company Talisman Energy. In 2000, Talisman is expected to increase net energy production by about 19%, far higher than the flat to down rates expected at many competitors.
Its shares trade at only about five times projected 2000 earnings before interest, taxes, depreciation and amortization, a discount to the 6.5 times EBITDA ratio of its peers, according to Salomon Smith Barney. (EBITDA is an approximation of operating cash flow.)
At Tuesday's close of 29 5/16, Talisman shares are off 19% from their late 1997 highs of 36 1/8. The stock trades at 38x 2000 First Call consensus earnings estimates of 73 cents per share, a 70% rise from 1999 estimates. Salomon Smith Barney has a price target of 40-41 for the stock.
(It should be noted that all three of these stocks trade at nice premiums to their projected long-term annual earnings growth of 15% -- though higher gas prices would boost their earnings and thus compress their multiple.)
Of course, if the winter is much warmer than expected, gas prices -- and these stocks -- would likely dip again. But thin inventories make shortages a more likely prospect when the leaves start falling from the trees. And it won't take much in the way of cold weather to make investors warm up to gas stocks fast.
Full article: Rising Gas Prices May Be More Than a Passing Storm
See: techstocks.com |
