Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, small-cap energy company Contango Oil & Gas (AMEX: MCF ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at Contango's business and see what CAPS investors are saying about the stock right now.
Contango facts
| Headquarters (Founded) |
Houston (1986) |
| Market Cap |
$908.55 million |
| Industry |
Oil and gas exploration and production |
| Trailing-12-Month Revenue |
$180.16 million |
| Management |
Founder/Chairman/CEO Kenneth Peak
CFO Sergio Castro
|
| Return on Equity (Average, Past 3 Years) |
24% |
| Cash/Debt |
$63.74 million / $0 |
| Competitors |
BP (NYSE: BP )
Newfield Exploration (NYSE: NFX )
Royal Dutch Shell (NYSE: RDS-A )
|
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 98% of the 543 members who have rated Contango believe the stock will outperform the S&P 500 going forward. These bulls include toshimelonhead and the top-ranked member in all of CAPS, TMFBabo.
Just last month, toshimelonhead singled out Contango as a slick selection: "I like that it is a small, growing company with no debt. Shares seem to have recovered from the BP oil spill, and I like this play better than BP because it doesn't have the pending lawsuits and settlements to worry about."
Contango's low-cost operations, shareholder friendly management team, and immaculate balance sheet continue to support its five-star CAPS rating. In fact, Contango even boasts a lower financial leverage ratio (1.5) than that of competitors BP (2.9), Newfield (2.2), and Royal Dutch Shell (2.2), as well as integrated energy gorillas like ExxonMobil (NYSE: XOM ) (2.1) and ConocoPhillips (NYSE: COP ) (2.2).
CAPS leader TMFBabo expands on the outperform case:
At an oil and gas conference, [CEO Ken Peak said] something to this effect: "I don't give myself stock options because then I'd have to give my board and my employees stock options -- and I don't want to give my board and my employees stock options." ...
I think the best share issuance/repurchase strategy is one where management buys shares back when it's low and issues them when it's high. The second best would be Ken Peak's style -- that man hates dilution.
What you get in Contango is a very low-cost gas producer operating in the Gulf of Mexico trading at a decent (but not amazing) discount to its reserves with a great CEO -- not a bad bet.
What do you think about Contango, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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