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4-Star Stocks Poised to Pop: Eagle Rock

By Brian D. Pacampara | More Articles
July 13, 2009 | Comments (2)

Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, natural gas partnership Eagle Rock Energy Partners, L.P. (Nasdaq: EROC  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Eagle Rock's business and see what CAPS investors are saying about the stock right now.

Eagle Rock facts

Headquarters (founded)

Houston, Texas (2002)

Market Cap

$207.33 million

Industry

Oil and Gas Storage and Transportation

TTM Revenue

$1.43 billion

Management

Chairman/CEO Joseph Mills

CFO Jeffrey Wood

TTM Return on Equity

16.6%

Dividend Yield

3.6%

Competitors

Enterprise Products Partners (NYSE: EPD  )

Linn Energy (Nasdaq: LINE  )

CAPS members bullish on EROC also bullish on

Chesapeake Energy (NYSE: CHK  )

General Electric (NYSE: GE  )

CAPS members bearish on EROC also bearish on

Precision Drilling Trust (NYSE: PDS  )

Starbucks (Nasdaq: SBUX  )

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 314 of the 325 members who have rated Eagle Rock -- some 97% -- believe the stock will outperform the S&P 500 going forward. These bulls include GDubyaHayduke and All-Star rdpatton, who is ranked in the top 10% of our community.

Just two weeks ago, GDubyaHayduke tapped Eagle Rock as a solid bet to make some future income:

Fair hedges to at least 2011. Distribution has been .41 in past and I believe it will recover to that level. Currently paying down debt with distribution but will supposedly pay arrears once covenants are met. I'm bullish on [natural gas] and US oil. So take that into consideration.

In an earlier pitch, rdpatton expands on Eagle Rock as a natural turnaround play:

This stock has been hammered because they slashed their dividend in order to pay down debt. This caused a rotation from income investors to deep value investors. I think [Eagle Rock] is significantly undervalued at this level. Their earnings dropped … due to lower volumes from rigs being laid down due to lower [natural gas] prices and while this is concerning I believe that ultimately [natural gas] prices and thus drilling and volumes will rebound within a year. This is a highly-levered Nat Gas play.

What do you think about Eagle Rock, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Enterprise Products is a Motley Fool Income Investor pick. Chesapeake and Starbucks are Motley Fool Inside Value recommendations. Starbucks is also a selection of Stock Advisor. The Fool owns shares of Chesapeake and Starbucks. The Fool's disclosure policy always gets a perfect score.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 13, 2009, at 4:23 PM, topsecret09 wrote:

    Book value Is about $9.00,seems way too cheap too me. I think It has been way oversold. Nobody Is in this stock at a profit right now.... I am buying It at these levels.

  • Report this Comment On July 13, 2009, at 4:42 PM, prose976 wrote:

    This is a classic oversold equity. Wait for the upward momentum, the dividend increase and the Fall/Winter season to creep up on us. Also watch for the media/Goldman spin on oil and NG. Remember the squirrel who stored all the nuts for winter. I've read some comments about the possibilitie of NG collapsing. It has already collapsed. Unless it starts going for free, it can't go much lower. Tremendous upside...miniscule downside from here.

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2/14/2012 4:00 PM
EROC $11.17 Up +0.19 +1.73%
Eagle Rock Energy… CAPS Rating: *****
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