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2 Lesser-Known Energy Stocks Ahead of Earnings

Stocks in this article: CLR ATO XOM

The company does have another strange characteristic. By the end of the first quarter 2012 it had less than $43 million in total cash, yet its total debt was $1.89 billion. It also had a minus $1.52 billion in levered free cash flow, probably owing to that nasty-high debt level.

Continental Resources' trailing 12-month operating margin was a picture-perfect 55% and their profit margin a lovely 33%. In the first quarter their quarterly revenue growth year-over-year was almost 70%, and their return on equity stood at 31%. Their situation has me spellbound and curious.

At $69-per-share the stock is selling at six times sales and five times book value, yet their five-year expected PEG ratio is below 1 (0.79), which hints of some share undervaluation.

It wouldn't surprise me if they surprise to the upside on their earnings and even raise guidance. With West Texas crude oil still above $93-a-barrel things may start to look even brighter for CLR. Keep an ear open to their earnings report and conference call -- "ready, get set, not yet?" Study the chart of CLR below.

CLR Debt to Equity Ratio Chart CLR Debt to Equity Ratio data by YCharts


The second energy company that will report after the market closes Wednesday is Atmos Energy (ATO) the Dallas, Texas-based company that engages in the distribution, transmission and storage of natural gas in the U.S.

Atmos operates in three segments: natural gas distribution, regulated transmission and storage, and nonregulated. ATO pays a higher dividend yield than their Houston, Texas competitor Exxon Mobil.

Last Wednesday ATO announced that it completed the sale of its natural gas distribution assets located in Missouri, Ill. and Iowa to Liberty Energy (Midstates), an affiliate of Algonquin Power & Utilities.

The transaction included the transfer of approximately 84,000 residential and commercial meters. Net cash proceeds for rate base and related working capital were approximately $129 million.

The announcement stated, "These proceeds will be redeployed to fund growth opportunities in the remaining jurisdictions the company serves. Atmos Energy expects to record a net of tax gain on the sale of approximately $6 million, or $0.06 per diluted share, subject to final purchase price adjustments. For the ten months ended July 31, 2012, these operations provided approximately $7 million of net income, or $0.07 per diluted share."

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