Today’s recommendation is a Houston-based energy exploration and development company chosen for its fast growth. Production and revenue from oil both increased sharply during the June quarter.
Carrizo Oil & Gas (CRZO)
from Upside
Carrizo Oil & Gas (CRZO) focuses on proven shale properties in Colorado, Ohio, Pennsylvania and Texas. The company’s Eagle Ford operations, which span more than 50,000 drillable acres in Texas, have estimated oil and gas reserves of 173 million barrels, or about 42% of Carrizo’s total.
June-quarter production averaged 11,747 barrels of oil per day, up 26% from the March quarter and up 54% from a year earlier. Revenue from oil surged 54% and represented 79% of total sales.
At 96, Carrizo’s Overall score is well above the average of 57 for exploration-and-production stocks in the S&P 1500. For 2013, per-share earnings are expected to jump 57% to $2.65. Revenue should climb 35%. For 2014, the consensus is $3.34, up 26% on revenue growth of 20%.
Shares have rallied 78% this year but still trade at a reasonable valuation considering the growth outlook. Carrizo, with a modest P/E of 12 based on estimated 2014 earnings, is being initiated as a Best Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, October 2013