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6 Stocks with Explosive Upside Potential
02/29/2012 9:00 am EST
Joel Anderson of Equities.com uses a defined fundamental approach to uncover six energy and basic materials stocks with potential to explode to the upside.
Which energy and basic materials companies are poised to make waves over the next few years? While it’s never easy to accurately project the direction of any industry, particularly ones in a sector that relies heavily on the ever-shifting prices of commodities, but the following six companies have projected solid growth into the future; growth that will no doubt be powered by their strong margins.
The following six companies each have the following positive valuations that could mean they’re destined to grow. The first is projected annual EPS growth over the next five years exceeding 25%. This means that the companies expect to continue growing at a solid rate.
These companies are also relatively cheap based on their earnings and projected earnings, as they have a PEG ratio (the ratio of P/E to projected growth) of under one. Finally, the companies have an operating margin of over 25%, meaning that they are keeping a large portion of their profits.
Thompson Creek Metals Company (TC)
Thompson Creek Metals mines molybdenum in Canada and the United States. With facilities throughout both countries, Thompson Creek is expanding rapidly.
- Projected EPS growth next five years: 59%
- PEG: 0.11
- Operating margin: 39.52%
Gulfport Energy Corporation (GPOR)
Gulfport Energy is an independent oil and gas company with properties in West Texas, West Cote Blanch Bay, the Louisiana Gulf Coast, and Hackberry fields.
- Projected EPS growth next five years: 48%
- PEG: 0.34
- Operating margin: 48.4%
CARBO Ceramics (CRR)
CARBO is a supplier of ceramic proppant, a key material used in hydraulic fracturing, better known as fracking. The company also provides software, consulting services, spill prevention, and geotechnical monitoring for the fracking process.
- Projected EPS growth next five years: 35.10%
- PEG: 0.47
- Operating margin: 31.58%
Concho Resources (CXO)
Concho Resources is an independent oil and gas company with its core operations in the Permian Basin in West Texas.
- Projected EPS growth next five years: 43.81%
- PEG: 0.58
- Operating margin: 49.93%
Molycorp is a rare earth mining company that operates one of the only rare earth mining properties outside of China.
- Projected EPS growth next five years: 27.50%
- PEG: 0.70
- Operating margin: 38.52%
Resolute Energy Corp. (REN)
Resolute Energy Corp is an independent oil and gas company with properties in Wyoming and Utah.
- Projected EPS growth next five years: 29.00%
- PEG: 0.96
- Operating margin: 25.70%
By Joel Anderson, contributor, Equities.com
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