4-Star Stocks Poised to Pop: Harvest Natural Resources

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 Harvest Natural Resources (NYSE: HNR  ) has earned a respected four-star ranking.

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

Harvest Natural facts

Headquarters (founded) Houston, Texas (1988)
Market Cap $350.3 million
Industry Oil and gas exploration and production
Trailing-12-Month EBITDA ($87.0 million)
Management CEO James Edmiston (since 2005)
CFO Stephen Haynes (since 2008)
Return on Equity (average, past 3 years) 2.7%
Cash/Debt $28.8 million / $15.6 million
Competitors Dana Petroleum
Premier Oil
Sterling Energy

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

On CAPS, 95% of the 511 members who have rated Harvest Natural believe the stock will outperform the S&P 500 going forward.

Just last month, one of those Fools, All-Star TMFDeej, tapped the stock as a particularly juicy, but speculative, opportunity:

I don't usually engage in [merger arbitrage] situations here in CAPS or in real life, but [Harvest Natural] is selling a huge chunk of [Venezuela assets] and if the deal goes through (which is by no means a certainty) the stock will likely pop to $12 to $13 per share. If not, ouch. The spread here is massive enough to play in CAPS.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Harvest Natural may not be your top choice.

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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 (6) | Recommend This Article (2)

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 September 22, 2012, at 6:03 PM, EllenBrandtPhD wrote:

    Brian,

    I'll post a long, serious post Sunday.

    But talking about the Stock as a Stock: The MMs working for the Longs could scare the bejesus out of remaining Trapped Shorts overnight by making sure December 17.50 - maybe even 20.00 - Options are promptly posted, both on the Call and the Put side.

    I think they'd be besides themselves. Tearing their hair out, provided they are not bald already.

  • Report this Comment On September 25, 2012, at 11:16 PM, EllenBrandtPhD wrote:

    Brian,

    Glad I delayed posting, because the Reliance of India deal with PDVSA today is a fabulously Bullish predictor for the Petrodelta deal.

    No wonder the Trapped Shorts have been trying to piggyback so hard on the nasty Market the past two days!

    I just posted this at Reuters - and believe every single word of it:

    This new deal bodes VERY well - in fact, is important to - the pending approvals for Harvest's deal with Pertamina.

    Pertamina wants to take its dividend from Petrodelta in Oil, not in money. It's the only potential "sticking point" to the deal being approved by both governments.

    This new Indian deal - in the wake of several others like it recently - show that there is literally no reason Venezuela will not grant Pertamina's conditions on Petrodelta.

    If the Chavez government wins re-election - and it looks like it will - most expect the approvals for Petrodelta to come in quickly.

    If Capriles by some miracle ousts Chavez, HNR could conceivably be wooed by a bigger and better deal from Sinopec, thought to be its original suitor. So the election is a win-win for HNR, if not for Pertamina, which wants the Chavez regime - people they know - to win.

  • Report this Comment On October 03, 2012, at 7:21 AM, EllenBrandtPhD wrote:

    The latest! Another bashing "opinion" piece out of Indonesia, probably bought and paid for by the Trapped Shorts, as the last one was thought to be.

    One way everyone can tell this is a BOO! piece is by the inaccurate statement of the amount Pertamina would forfeit if they backed out of the deal after the early September cut-off. It is $75 million, not $5 million as the story incredibly states.

    But what is most striking is that such a story would come out a week after Venezuela's big deal with India's Reliance and just two days after this weekend's big deal with Rosneft. Like them or hate them, the Chavez government is bending over backwards to attract many more international investors into their Energy sector.

    And once more, it is Pertamina, not HNR, which would be put on the extreme defensive if by some miracle Senor Chavez is NOT elected!

    In that case, HNR will - not would, WILL - attract higher counter-bids in line with international valuations for a property of this size and potential. The minimum most analysts are talking about is $1 billion, or over 40 percent more than the Pertamina bid on the table.

    Ergo, it is Pertamina which dearly wants a Chavez victory, which would give them this property as a potential steal.

    The dividend paid in Oil has been granted to others in similar situations. There is no reason that PDVSA and Pertamina will not come to an agreement on this sticking point quickly after the election.

    In fact, watch for possible - probable? - analyst target raises immediately after the election, so long as the conclusion is peaceful - which, again, is more likely if Senor Chavez wins.

    It amazes me how out of touch with reality some hopeful Short sellers can be.

    Remember that it took about half a year for HNR and Pertamina, which have worked together for years and have a solid relationship, to come up with the announced deal in June and its pricing.

    Everyone knew at that point what, when, why, and how the subsequent negotiations would proceed. And with the successful passing of the September deadline, all is much more likely to be going very well than otherwise.

  • Report this Comment On October 07, 2012, at 11:56 PM, EllenBrandtPhD wrote:

    Chavez wins by over 10 points, as originally expected before the Financial Times's furious propaganda campaign.

    Approvals should theoretically come in quickly now.

    Also may be time for the analysts to raise their targets to 13 or 14 minimum.

    Note, too, that this may embolden China to push for a quick international solution to the South China Sea dispute in its favor.

    Since HNR is pretty much the only international company which immediately benefits from a Chinese "win" - its potentially rich bloc, which overlaps with Talisman's, would go up significantly in value overnight - it may be about time for observers other than us to start noticing it.

    I'm going to ask them to talk about it at the next earnings conference call, which could well be a very, very happy one.

  • Report this Comment On October 09, 2012, at 9:05 AM, EllenBrandtPhD wrote:

    The ScriptBots on the HNR Yahoo Finance board - which is all ScriptBots now - finally got around to posting that Hatchet Job piece I mentioned above. Note again that this piece is from a suspect website and exceptionally inaccurate.

    For a good piece on Venezuela and Oil, here is a link from Andres Cala and Michael Economides, whom everyone will know and respect:

    http://www.energytribune.com/articles.cfm/11776/Chávez-...

    Once again, the central thesis in the Hatchet Job piece is totally and completely WRONG.

    Pertamina wanted Senor Chavez to win, and his doing so will cement the approvals needed for the deal quickly, say most sources.

    If Senor Capriles had won, HNR would almost certainly have gotten a higher counterbid, and Pertamina would have had to meet it.

    Pertamina HAD TO wait until after the election before going to the Indonesian government for approval - which should be pretty much a rubber stamp - to ensure that the deal would not be scotched after the fact by a change in the Venezuelan government. This was simply prudent behavior.

    As for Pertamina's condition - that dividends from Petrodelta be paid in Oil, not cash - there is no reason now that Venezuela should deny it, since they have made similar deals with other powerful Oil companies in the past month or two alone.

    While this is a heavily institutional stock, and no respectable institution should be swayed by the childish Short and Distort tactics of the Trapped Short Sellers, it would be nice if the Market Makers stopped coddling the Shorts and let the stock trade honestly for a change.

    Once more, HNR's current market value is absurdly below the value of the coming deal. That means the entire rest of the company's assets are being assigned a value of essentially zero, which is dirty, dirty playing.

    Fortunately, anyone intelligent knows it is.

  • Report this Comment On October 12, 2012, at 9:23 AM, EllenBrandtPhD wrote:

    And yet more Short-side silliness on the Yahoo Finance board!

    ***** While most believe Indonesian and Venezuelan government approvals for the Petrodelta deal may very well come in by the end of November - if not sooner - the final deal needs various shareholder approvals and will not likely close until March. That's why the original timetable was set up this way in June, leaving time for the Venezuelan elections to pass, the negotiations for Pertamina to receive its payments in Oil to be set up, the government approvals to come in - and finally, the shareholder approvals.

    We are well into the timeline, and it seems to be going exactly as planned.

    *** Meanwhile, though, HNR wants to get going on some aggressive drilling in Gabon - and perhaps elsewhere. They are perfectly right to pick up some additional cash with the potential dilution less than 2 percent. This stock has been moving up and down in increments of three or four or five percent pretty much every single week, as our Dear Shorts get more and more nervous. So now they're complaining about potential 2 percent dilution up the road?!

    *** The last sets of Converts allowed Debtholders to convert for shares between 5 and 6 dollars. This (minor) set of Converts sets the bar almost 100 percent higher at 10.

    That is out-of-your-mind Bullish, as our little Short and Distort friends certainly know.

    *** Numerous stories - all over the place, all over the world - on confirmation by Pertamina that the Petrodelta deal will be consummated as planned.

    Does one think it is an accident that we are getting this announcement on new Converts to coincide with strong, strong assurances on the deal's consummation?

    This is actually a solid "Take That, You Idiots!" knockout punch to the Shorter Distorters.

    *** Earnings and conference call now only three weeks or so away. Expect it to be Uber-Bullish and Uber-confident.

    And anyone absorbing the lies promulgated daily on the Yahoo Joke Board should simply contact Stephen Haynes in Houston and chat with him. He is very open to talking frankly with shareholders and potential shareholders.

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