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4-Star Stocks Poised to Pop: ATP Oil & Gas

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, oil and natural gas producer ATP Oil & Gas (Nasdaq: ATPG  ) has earned a respected four-star ranking.

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

ATP facts

Headquarters (Founded) Houston (1991)
Market Cap $342.5 million
Industry Oil and gas exploration and production
Trailing-12-Month Revenue $651.3 million
Management Founder/Chairman/CEO T. Paul Bulmahn CFO Albert Reese, Jr.
Return on Equity (Average, Past 3 Years) (30.4%)
Cash/Debt $172.2 million / $2.0 billion

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 96% of the 1,398 members who have rated ATP believe the stock will outperform the S&P 500 going forward. These bulls include MajorBob04 and Saratogahawk.

Earlier this week , MajorBob04 tapped ATP as a stock priced for imperfection: "Oil prices are climbing and any shred of good news for this company will send this stock even higher."

In fact, ATP sports a particularly paltry price-to-cash flow of 4. That represents a discount to much larger energy plays like BP (NYSE: BP  ) (8), ExxonMobil (NYSE: XOM  ) (7), and PetroChina (NYSE: PTR  ) (5).

In a reply pitch to MajorBob04, Saratogahawk elaborates on the bargain opportunity:

Leaseholds are in areas with large proven reserves. Octabuoy, Titan and Innovator are special drilling rigs with lots of market value. Israel and Cheviot are not figured in at all yet. Worst possible scenario that plays out is that ATPG gets bought out at a significant price based on reserve estimates. That probably makes any current holder some money. Long term by beginning of 2013 production will be up around 50k boe per day. That gives ATPG lots of free cash flow to develop the other leaseholds and open Cheviot. 2 years out this could easily be a $30-50 play.

What do you think about ATP, 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!

Interested in another easy way to track ATP? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (3) | Recommend This Article (7)

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 November 28, 2011, at 2:28 PM, AirForceFool wrote:

    Isreal and Cheviot aren't factored in because they are just as much (in my opinion more) liabilities than cash cows... Isreal will take tons of money and is iffy to begin with... natural gas prices are in the toilet, so any NG pulled will need to be as a byroduct and while not quite worthless won't help the bottom line significantly...

    Don't get me wrong... I recently doubled down, and when prices recently went below $7 I tripled my already overweight double position... I am long ATPG... but how can one read $172M in cash and 2B in debt and not get a little queezy?


  • Report this Comment On November 28, 2011, at 2:32 PM, AirForceFool wrote:

    I was thinking more liability on the Isreal side than Cheviot... I just wish they'd eventually spend some of their acutal cash on servicing their debt.


    Long ATPG... but wondering more as time goes by

  • Report this Comment On December 01, 2011, at 10:24 AM, shawncoons wrote:

    Anyone who has followed this stock has seen that the management has consistently over-promised and over-stated projections. So basing calculations on the numbers they have given is not necessary a good idea. With the debt that ATP has the worst case scenario is not a buy out, it is bankruptcy.

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