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Under-the-Radar Energy Stocks for Today

Seacor and Arena Resources are two smaller energy companies that don't pay dividends. But their financial strength makes up for it.
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"Under-the-Radar Stocks" is a daily feature that uncovers little-known companies worthy of investors' consideration. Check in at 5 every morning to find out about stocks that tend to beat their bigger brethren.

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

As the price of crude oil plummeted by more than $100 a barrel since reaching a peak of almost $150 last July, it's paid dividends to be invested in the strongest energy companies. Even if some of the best don't actually pay dividends.

No dividend payouts mean no guaranteed income. The upside, however, is a stock that surges when oil rises. Larger companies such as

Exxon Mobil

(XOM) - Get Exxon Mobil Corporation Report



(CVX) - Get Chevron Corporation Report



(COP) - Get ConocoPhillips Report

offer attractive dividend yields, but they're also burdened by heavy debt.

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Only 35 of 391, or 9%, of energy stocks covered by Ratings earn "buy" recommendations.

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TheStreet Recommends

Seacor Holdings

(CKH) - Get SEACOR Holdings Inc. Report


Arena Resources

(ARD) - Get Ardagh Group S.A. Class A Report

are among them.

Fort Lauderdale-based Seacor Holdings is a major player in the oil and gas equipment and services market. The company's principle business is providing support services for offshore oil and gas exploration. This is an extremely profitable niche, particularly during oil rallies. Ratings upgraded the stock to "buy" on May 15.

Seacor's first-quarter revenue rose 12.7% to $400 million, and earnings per share jumped 57% to $2.36. Its cash balance declined 19% to $452 million. Still, Seacor made efforts to pay down debt, cutting its long-term obligations by 2% to $930 million.

Shares of Seacor have enjoyed a 12% increase this year, beating the

S&P 500 Index's

1% gain and the

Dow Jones Industrial Average's

4% decline. But the stock is still cheap based on earnings, sales, book value and cash flow in the oil and gas equipment and services industry. With a price-to-earnings ratio of 7.25, Seacor is 26% cheaper than its average peer.

Arena Resources of Tulsa, Oklahoma, is an oil and gas exploration and development company with properties in Oklahoma, Kansas, New Mexico and Texas. Its revenue, earnings and stock price have suffered during oil's descent, though Arena has padded its cash position and cut debt during the recession. Consequently, it's in an ideal position to maximize profits as oil rebounds. Oil yesterday rose above $63 a barrel for the first time in six months. Ratings has had a "buy" rating on the stock since its initial coverage date of May 25, 2007.

The company's first-quarter revenue fell 55% to $20 million, underperforming its peer group. Earnings per share declined 66% to $0.17. However, Arena has a $52 million cash balance, having paid off all $41 million of its debt since the first quarter of 2008. Arena has no interest expenses to speak of.

Investors have rewarded Arena's financial strength, sending the stock up 22% this year, beating the S&P 500 and the Dow. The stock is expensive based on earnings, sales, cash flow and book value in the oil and gas exploration and production industry. Arena trades at a price-to-earnings multiple of 18.13, making it 20% more expensive than its average peer.