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

Based on the aggregated intelligence of 150,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, small-cap oil and natural gas producer ATP Oil & Gas (NYSE: ATPG  ) has earned a coveted five-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

$855.4 million

Industry

Oil and gas exploration and production

Trailing-12-Month Revenue

$272.8 million

Management

Founder/CEO T. Paul Bulmahn
CFO Albert Reese, Jr.

Return on Equity (Average, Past 3 Years)

17.5%

Cash / Debt

$317.1 million / $1.3 billion

Competitors

Stone Energy (NYSE: SGY  )
Forest Oil (NYSE: FST  )
Noble Energy (NYSE: NBL  )

Other Highly Rated Oil and Gas Stocks

ExxonMobil (NYSE: XOM  )
BP (NYSE: BP  )
ConocoPhillips (NYSE: COP  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 96% of the 848 members who have rated ATP believe the stock will outperform the S&P 500 going forward. These bulls include CanadaDreamer and All-Star mrindependent, who is ranked in the top 1% of our community.

Late last month, CanadaDreamer brought the stock's powerful catalyst to our community's attention:

[ATP] trades at significant discount to sector averages and peer group metrics. Debt is an issue, but should be quickly resolved once cash flow from Telemark begins in Q1. Once the market is comfortable with production rates and cash flows, [ATP] will see a significant rerating.

In a pitch from two days ago, mrindependent echoes that enthusiasm. Here's an excerpt:

Some highlights of the February 2 press release include the company’s prediction that production will DOUBLE in 2010 and the company’s statement that the reserve replacement ratio for 2009 was 376%. Wow! ... The company’s presentations explain how the company is different from other oil and gas producers in two significant ways: (1) the company only acquires properties with proven reserves, which leads to a 98% drilling success rate and (2) the company organizes its drilling process in “hubs”. By using hubs, the company is able to achieve better economics and growth. ... Although long-term debt is high at $1.2 billion, there is no solvency concern because the company has wonderful profitability expectations and $317 million of cash on hand.

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!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.


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Brian Pacampara
TMFEZMagic

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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