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7 Undervalued Oil and Gas Stocks Ripe for Gains

3. Enterprise Products Partners (EPD - Get Report)

Company profile: Enterprise, a partnership with a market value of $43 billion, is an integrated provider of natural gas and natural gas liquids services, including processing, transportation and storage.

Dividend Yield: 5.20%

Investor takeaway: Its shares are up 11% this year and have a three-year, average annual return of 31%. Analysts give its shares 13 "buy" ratings, eight "buy/holds," and one "hold," according to a survey of analysts by S&P. S&P has it rated "strong buy" with a $59 price target, which is a 23% premium to the current price.

The ratings firm says it "is well-positioned to benefit from its strategically located assets, diverse cash flows, and solid balance sheet. It has a strong asset base, in our view, with access to high-demand markets and major supply sources" and adds that "we expect rising pipeline volumes to boost earnings and cash flow over the next several years."

Enterprise Products Partners has a forward P/E of 18.4.

2. Pioneer Natural Resources (PXD)

Company profile: Pioneer, with a market value of $10 billion, explores for and produces oil and natural gas in the U.S.

Dividend Yield: 0.10%

Investor takeaway: Its shares are down 7 % this year, including 21% this year. Analysts give its shares 16 "buy" ratings, six "buy/holds," and eight "holds," according to a survey of analysts by S&P. S&P has it rated "strong buy" with a $135 price target, a 63% premium to its current price.

S&P says "a higher liquids mix," meaning a shift to producing more oil and natural gas liquids, should help boost earnings growth to $5.78 per share in 2012 and $8.85 in 2013, up from $3.95 per share last year. Pioneer Natural Resources has a forward P/E of 10.9.

1. Apache (APA - Get Report)

Company profile: Apache, with a market value of $33 billion, is one of the largest independent exploration and production companies in the U.S. It explores for, develops and produces natural gas, crude oil and natural gas liquids. An international company, in North America, its interests is focused on the Gulf of Mexico, the Gulf Coast, and Permian and Central regions of the U.S. and Canada thanks to several recent acquisitions.

Apache has gone on an acquisition binge recently, spending more than $18 billion over the past several quarters and has greatly diversified its product mix of oil and gas and where they are produced, which should serve to mitigate market price swings in any one particular product.

Dividend Yield: 0.7%

Investor takeaway: Its shares are down 5.5% this year, including 14% in the past three months. Analysts give its shares 20 "buy" ratings, six "buy/holds," and seven "holds," according to a survey of analysts by S&P.

S&P has it rated "strong buy" with a $136 price target, a 65% premium to its current price, and that's after knocking down the target price from $145 in May. Apache has a forward P/E of 6.8.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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APA $55.43 -3.70%
DVN $36.10 -2.20%
EPD $26.78 -1.30%
KMP $102.03 1.98%
SU $29.35 2.30%


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