Who would have expected Chesapeake Energy (CHK) to make it?
It would have been easy to write off the stock after it suffered sharp plunges in 2014 and 2015. But it is recovering -- albeit slowly -- and offers a risky but interesting growth opportunity. Investors should approach the stock with care.
Chesapeake Energy plans to announce earnings before the market opens Thursday. Observers of the oil and gas industry and the company expected some improvement from earlier in the year.
Chesapeake shares dropped 3.6% during Tuesday's session. But the company is up 18% year to date, the result of its success in offloading assets to control mounting debt. It is also starting to see some benefits from a few key initiatives and a corporate restructuring.
The long-term outlook for the company has improved. Analysts from Citi, Bank of America, Merrill Lynch, Nomura, Jefferies and Deutsche Bank have raised their target prices.
August was a special month for Chesapeake. Fueling a solid rebound in the beaten-down stock were rising oil prices, asset sales and an improving balance sheet.
RBC Capital has said the company's lower cost structure and improved margin outlook over the next few years is a positive. Chesapeake has previously said its earnings before interest, taxes, depreciation and amortization will double by 2018, while the share of liquids production will rise.