Time to Short SandRidge Energy? By Jeremy Phillips | More Articles August 16, 2010 | Comments (0) ShareThisAt Fool.com, we believe in buying great companies for the long term. However, not every company commands a fair price, and many trade for far more than they're actually worth.
Company Forward P/E 5-Year Growth Estimate % 5-Year PEG Ratio Forest Oil (NYSE: FST) 12.87 6.25 2.06
Source: Capital IQ, a division of Standard & Poor's.
With a PEG ratio greater than 1.5, short interest is likely targeting SandRidge Energy on account of its significant P/E premium relative to its growth potential.
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I wouldn't be too short here. Forest could be taken out at any time IMO.
TER: Are there some other names you like in the Eagle Ford and Granite Wash—plays other than SM?
JL: Forest Oil Corporation (NYSE:FST) is an interesting name. That's one I've followed for a long time. The company's based in Denver, but they are very big in the Granite Wash area, especially the northern Texas Panhandle. The company has really been trying to focus on organic growth, and it's a company that I think is a takeover target. Their location is now a sexier area that is gaining enthusiasm. When you look at that Granite Wash or even Eagle Ford Shale, those two areas are becoming much more of a hot commodity because they tend to have more NGLs on a percentage basis that can be sold back into the market. People are going to take advantage of those economics. Whether you're looking at the Eagle Ford or the Granite Wash, I think you can't have a natural gas portfolio that's not exposed to either.