Qualcomm stock is up 13.2% this year, and 42.2% during the past 12 months. Market capitalization has...
Icahn Eyes Chesapeake
10/02/2014 7:00 am EST
Our latest featured recommendation is one of the largest US-based oil and natural gas explorers and producers. Its production mix is 72% gas and 28% oil, explains Pat McKeough of TSI Network.
The shares of Chesapeake Energy (CHK) have nearly doubled since mid-2012, when activist investor Carl Icahn bought a stake in the firm.
Icahn, who has a history of pushing companies to make changes that raise shareholder value, subsequently replaced four of Chesapeake's eight board members with his nominees.
The company also pushed out controversial co-founder, CEO and chairman Aubrey K. McClendon.
Chesapeake continues to restructure by selling non-essential properties and assets. That lets it pay down debt and focus on areas with strong potential.
Most recently, the company set up its oilfield services division as a separate publicly traded firm. In June 2014, Chesapeake handed out shares in this new company, called Seventy Seven Energy, as a tax-deferred dividend. The new stock trades on New York under the symbol SSE.
Chesapeake's $11.5 billion of debt is a high, but manageable, 68% of its market cap. It also holds cash of $1.5 billion, or $2.29 a share, and expects to get another $700 million from asset sales by the end of this year.
The company's daily production averaged 632,000 barrels of oil equivalent in the quarter ended June 30, 2014, up 2.6% from 616,000 a year ago. Cash flow per share rose 3.5% to $2.05 from $1.98.
The stock trades at just 3.1 times its annual cash flow of $8.20 a share, based on the latest quarter. Chesapeake Energy is a buy recommendation for more aggressive investors.
More from MoneyShow.com:
Related Articles on STOCKS
Of course, there are arguments as to why China should or should not bow to U.S. demands, and the inv...
Headquartered in New Jersey and founded in 1891, Merck & Co. (MRK) is a global health care compa...
Founded in 1902, Minnesota Mining and Manufacturing (MMM) started as five businessmen set out to min...