7 Value Picks to Hold

NEW YORK (TheStreet) -- Chesapeake Energy (CHK), Marathon Oil Corporation (MRO), Chevron (CVX), DISH Network (DISH), Aetna (AET), Coventry Health Care (CVH) and WellPoint (WLP) are trading at attractive valuations and offer scope for long-term stock appreciation.

These stocks outperformed the Dow in the last one year, gaining 16% compared to the Dow's 1.5% increase. According to a Bloomberg consensus, these stocks have average buy ratings of 59%. These stocks are trading 7 to 9 times their estimated 2012 earnings

These stocks are listed in ascending order of upside implied by average analyst price target.
7. Chevron ( CVX) is an energy major with both upstream and downstream operations.

Net income for the second quarter of 2011 was reported at $7.7 billion, improving from $5.4 billion in the same quarter of the previous year. Sales during the quarter were $67 billion from $51 billion in the year-ago quarter, riding on higher crude oil and refined product prices.

The company resumed exploration and development drilling activity in the Gulf of Mexico and acquired new upstream resource opportunities in Kazakhstan, Australia and the U.S. during the second quarter. Also, Chevron completed the sale of its fuels marketing and aviation businesses in three Central American countries as well as other assets in China and North America.

Capital and exploratory expenditure increased during the first six months of 2011 to $13.4 billion from $9.4 billion in the corresponding 2010 period.

The company bought $1 billion of its common stock under its share repurchase program.Chevron's stock rose 13% in the last one year and it is trading at 6.6 times. The stock has 77% buy ratings and is estimated to return 37% over the next one year.

6. Coventry Health Care ( CVH) is Maryland-based healthcare company operating in three segments: Specialized Managed Care, Health Plan and Medical Services and Workers' Compensation.

Operating revenue for the second quarter of 2011 stood at $3 billion, up 6% from the prior year quarter on net earnings of $224.5 million. For full year 2011, the company expects to garner $11.73 billion to $12.195 billion with EPS to range from $3.48 to $3.63.

Several brokerages are positive on the stock. Morgan Stanley has raised its 2011 and 2012 EPS estimates and maintains an overweight rating on the stock with a price target of $39 per share. Analysts at Standpoint Research have upgraded the stock to buy from hold with a price target of $35 per share.

The stock is trading at 5 times its estimated 2011 earnings and analysts expect the stock to gain 43% over the next one year.

5. Aetna ( AET) supplies technology, integrated project management and information solutions to the oil and gas industry.

Net income during the second quarter of 2011 was $522.6 million compared with $494.6 million for the corresponding quarter of 2010. Operating earnings for the quarter were $512.9 million against $467.4 million during the same quarter prior year, driven by higher commercial underwriting margins. Total revenue was $7.7 billion versus $7.9 billion during the second quarter of 2010.

The company intends to be diversified player and acquire new capabilities, Mark T. Bertolini, CEO of Aetna, said, "I am pleased with the initial progress of our Accountable Care Solutions model for collaboration with high-quality health systems such as Carilion Clinic, Heartland Health and Emory Healthcare."

The stock has a buying rating of 57% and is likely to return 46% over the next one year. The scrip is trading at 7.4 times its estimated 2011 earnings.

4. Chesapeake Energy ( CHK) is an Oklahoma-based energy player developing unconventional natural gas and oil fields onshore in the U.S.

For the second quarter of 2011, the company reported average daily production of 3.049 billion cubic equivalent per day, up 9% year-over-year, but decreasing 2% sequentially due to the sale of its Fayetteville Shale Assets.

Net income for the quarter was $510 million, up from $255 million in the same period last year. Increased profitability resulted from higher operating income, which doubled to $985 million from the corresponding quarter of 2010. Revenue grew 50% during this period to $3.3 billion.

Oil price inflation and the proposed drilling program in the Utica Shale play have amplified the company's capital expenditure budget for fiscal 2011 and 2012 by $500 million to $6 to $6.5 billion each year. Analysts expect the stock to deliver 51% upside over the next one year with 55% buy ratings. The stock is trading at 9.2 times its estimated 2011 earnings.

3. WellPoint ( WLP) is the largest health benefits company in the U.S. with 34 million members affiliated to various health plans. WellPoint operates in three segments: consumer, commercial and other.

Medical enrollment increased to around 34.2 million members at the end of the June quarter, up 2.1% from the corresponding period in 2010. Operating revenue for the quarter was $14.9 billion, increasing 4.8% from the same quarter prior year. Higher operating revenue is attributed to premium increases designed to cover overall membership growth and cost trends. The commercial segment, accounting for three-fifths of the company's revenue, was stable during the quarter, while consumer segment expanded during the quarter but saw a dip in margins.

Going ahead, the company expects year-end medical enrollments at 33.9 million members. Operating revenue for fiscal 2011 is pegged at $59.9 billion, while EPS is expected to range from $6.9 to $7.1 per share. The stock is trading at 8.1 times its estimated 2011 earnings and analysts expect an upside of 52% over the next one year with buy ratings of 64%.

2. DISH Network ( DISH) is a pay TV provider and through its subsidiary DISH Network L.L.C., provides HD and DVR technology services to around 14.2 million satellite television customers.

Net income for the first quarter of 2011 increased to $549 million from $231 million during the corresponding period in 2010. Diluted EPS was $1.22 versus $0.52 during the corresponding period in 2010. Net subscriptions during the quarter were 58,000, closing with 14.191 million subscribers.

Higher profitability sustained margins. Net profit margin for the quarter was 17% against an average 8% delivered for fiscal 2010. Return on average assets was 22% during the second quarter of 2011. The stock ranked among Acadian Asset Management's top buys for the second quarter. The stock has analysts' buy ratings of 55% and is likely to return 53% over the next one year. Trading at 7 times its estimated 2011 earnings, the stock has gained 15% since the start of 2011.

1. Marathon Oil Corporation ( MRO) is an integrated international energy company engaging in the exploration and production, oil sands mining, integrated gas, refining, and marketing and transportation.

Marathon completed the spin-off of its downstream business during 2011 second quarter and acquired assets worth $3.5 billion in the Eagle Ford shale in Texas. For the second quarter, adjusted income from continuing operations was $689 million versus $440 million for the second quarter 2010. Total segment income was $713 million compared to $396 million from continuing operations in the same quarter of 2010.

"Going forward, we are confident that we have the foundation in place to deliver 5 to 7 percent compound average production growth during the period 2010 - 2016. This strong growth profile is underpinned by our pending top-five acreage position in the core, liquids-rich area of the Eagle Ford, as well as solid positions across the Bakken, Anadarko Woodford and Niobrara liquids-rich resource plays," Clarence P. Cazalot Jr., Marathon Oil's chairman, president and CEO, said.

With analysts' buy ratings of 54% and upside potential of 63%, the stock looks a good bet over the next one year. The stock is trading at 5.8 times its estimated 2011 earnings.

>>To see these stocks in action, visit the 7 Value Picks to Hold portfolio on Stockpickr.

More from Opinion

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Amazon's Assault on Grocery Stores Will Have a Profound Impact on Many

Amazon's Assault on Grocery Stores Will Have a Profound Impact on Many

It's Dumb to Think There Aren't Already Monopolies in Big Tech

It's Dumb to Think There Aren't Already Monopolies in Big Tech