Southwestern Energy ( SWN )
With natural gas prices stuck at depressed levels, Croft say that this independent, North American explorer and producer of natural gas, as well as crude oil, is one of his favorite contrarian stocks right now. He thinks there's a "good chance" the shares will outperform the broad market over the long term.
Croft thinks shares of the Houston-based company are a buy right now, partly on the expectation that U.S. natural gas prices will eventually rise on favorable energy and environmental policies, a rebounding economy and the potential full-fledged export of the commodity to Asia and Europe, where prices right now are much more expensive.
When all the stars align, Southwestern, with its conservative management team and knack for keeping operating costs low, should find itself in a very lucrative situation, he thinks.The company has been booking operating costs of about $1.50 per million cubic feet, according to Croft, which is low when compared with the approximately $2.50 at which natural gas is now trading, and among the lowest in Southwestern's peer group. The company continues to expand acreage in the Marcellus and other shale areas and should be able to grow production at 15% a year over the next three to five years, according to Croft. "Right now we don't need a lot more electric or power plants," says Croft. "But when we do, it will be
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