4 Upgraded, Undervalued Stocks

Energy XXI

The oil and natural gas company on Wednesday reported fiscal second-quarter earnings of $93.4 million, or $1.11 a share. In the second quarter of last year, the company reported a loss of $11.3 million, or 17 cents a share.

Energy XXI's estimated P/E for next year is 8.74. The average forward P/E for exploration and production companies is 274.28.

"We are increasing our target price by $1 to $40 on the greater-than-expected oil price premium and the increase in oil production from recent drilling projects," Capital One analysts wrote in a report Friday. "We continue to like the stock with our new target representing 16% upside but note that a solid Davy Jones flow test result of 40+ MMcfe/d gross (news expected by March) is likely needed to keep the stock moving significantly higher."

Fourteen of the 15 analysts who cover the stock rated it a buy. One considered it a hold.

TheStreet Ratings gives Energy XXI a B- grade with a $44.51 price target. The stock closed Thursday at $34.61 and has risen 11.97% year to date.

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Atlas Air Worldwide

The aircraft delivery company announced Wednesday that it financed its six remaining B747-8F aircraft deliveries.

Atlas Air Worldwide's estimated P/E for next year is 8.85. The average for the delivery services area of the market is 14.25.

"Despite the difficulties Atlas had in 3Q11, the earnings potential in 2012 should continue to be strong for the company," Dahlman Rose analysts wrote in a report in November. "Management lowered EPS expectations for 2011 to +$4.30, down from +$5.00 and compared to the initial expectations of +$5.30. We are intrigued by the outlook for 2012 for two reasons. The new -8F is finally in service, and each aircraft adds $0.04/share/month. The other new business is the passenger AMC business, which should also contribute to the bottom line."

Eight of the 12 analysts who cover Atlas rated it a buy. Four considered it a hold.

TheStreet Ratings gives Atlas Air a B- grade with a $56.66 price target. The stock closed Thursday at $48.67 and has risen 31.23% year to date.

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