Saturday, October 15, 2005

CIMAREX ENERGY CO (NYSE:XEC)

I originally began watching this company back in mid April, it was in the process of buying Magnum Hunter resource for about 2.1 Billion. Like in most acquisitions the buying stock took a hit in valuation, giving you a good opportunity to jump in. I got in at $36.20 wand sat idly by as the stock dipped down to $35, but I was still confident in my buy, the stock was still cheap and is again now. I sold my shares at $45.75 with no regrets, and as oil prices dipped many companies took a big hit.

Currently Cimarex is trading at a P/E ratio of slightly over 10, with an earnings per share of $4.01, and I think its too cheap. This stock is a strong oil play and with recent dips in prices is a good opportunity to get in. in fact if I had the money I would be buying this stock at anything below $40, if you're more careful its likely to pick it up somewhere between the $39 - $39.50 range, today it was trading as low as $38.82 before it closed at $40.23. if you pick it up somewhere within that range I think that you can easily see a gain of 10-12% within 6 months. The gains resulting of either the stock trading at a higher market multiple more inline with that of some other companies in the sector, such as ExxonMobil(XOM) which trades at a P/E of about 12.75 or actual earnings growth which have been in line with XEC's stock price with a PEG of 1.04, which is very healthy.

I am not responsible for your trade decisions made or not made because of my opinion shared here. You should always do your own research before buying/selling a stock.

1 Comments:

At 1:03 PM, Blogger Salbert said...

There aren't too many bad oil related companies out there. What do you think of EnCana (NYSE:ECA)? Check out my blog at coffeeandstockblog.blogspot.com soon. I update a lot.

 

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