The Zacks Analyst Blog Highlights: Encana, Exxon Mobil, Chesapeake Energy, W&T Offshore and Valmont Industries

Zacks

For Immediate Release

Chicago, IL – July 15, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Encana Corp. (ECA-Free Report), Exxon Mobil Corp. (XOM-Free Report), Chesapeake Energy Corp. (CHK-Free Report), W&T Offshore Inc. (WTI-Free Report) and Valmont Industries, Inc. (VMI-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday’s Analyst Blog:

Encana Upgraded to Outperform

 

On Jul 09, 2013, we upgraded Canadian natural gas producer Encana Corp. (ECA-Free Report) to Outperform from Neutral.

Why the Upgrade?
Encana has one of the largest natural gas resource portfolios in North America, which provides a diverse/high quality inventory of reserves. We see a solid long-term future for the company as demand for natural gas soars, spurred by its cost effectiveness and abundant supply in North America. A prudent asset disposition strategy and an ever-increasing share of liquids production are other positives in the Encana story.

Detailed Analysis

Calgary, Alberta-based Encana – one of North America’s largest producers of natural gas along with the likes of Exxon Mobil Corp. (XOM
-Free Report) and Chesapeake Energy Corp. (CHK-Free Report) – was an early mover in areas like the Horn River Basin in northeastern British Columbia and the Haynesville shale in Texas and Louisiana. It has amassed formidable land positions in both of those emerging regions and others. The company hopes to take advantage of the lower-than-average reserve decline rates and low-risk drilling opportunities that have characterized unconventional resource development across the industry in recent years.

We remain highly optimistic regarding the collaboration of Encana and Mitsubishi in developing the Cutbank Ridge, which is one of the most fertile and low-cost resource rich acreages in North America. With large proved undeveloped natural gas reserve, the region is expected to have the capacity of delivering long-term, affordable energy supplies to domestic and overseas markets.

We appreciate Encana’s strategy of disposing assets that do not fit into its long-term growth plan. The company’s divesture program includes the disposition of high cost yet low profit generating assets and a focus on asset base expansion that would render high returns. The net proceeds received from these property sales (more than $1.5 billion in 2011 and over $4 billion in 2012) also render a strong financial flexibility to the company.

Other Stocks That Warrant a Look

In addition to Encana, one can look at W&T Offshore Inc. (WTI
-Free Report) as a good buying opportunity. This North American upstream energy operator – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with potential to rise significantly from current levels.
 

Valmont Upped to Outperform

 

On Jul 11, we upgraded steel pipe and tube company Valmont Industries, Inc. (VMI-Free Report) to Outperform. Our view reflects strong demand environment across utility and irrigation markets.

Why the Upgrade?

Valmont had a strong first-quarter 2013 (reported on Apr 18) with both revenues and earnings topping Zacks Consensus Estimates. Revenues rose by double digits, buoyed by healthy gains across the company’s Utility Support Structures and Irrigation segments and contributions of acquisitions.

Following the release of the first quarter results, the Zacks Consensus Estimate for 2013 for Valmont went up 3.55% to $10.80 per share. The Zacks Consensus Estimate for 2014 has also moved up 1.43% to $11.35. With Zacks Consensus Estimates for both 2013 and 2014 moving up, the company now has a Zacks Rank #1 (Strong Buy).

Valmont’s strong presence in emerging markets should enable it to deliver incremental earnings in 2013. Its Irrigation and Coatings segments are witnessing strong momentum.

In the Irrigation segment, improving North American equipment demand amid the ongoing drought conditions and higher farm income is boosting sales and profitability.

Valmont is also poised to savor incremental opportunity in the utility market. The global transmission and distribution markets are seen as major long-term growth opportunities. Moreover, its Coatings segment is benefiting from moderating zinc prices and declining energy costs.

Valmont is actively pursuing capacity expansion through new constructions and extension of existing facilities to meet the increasing demand from utility customers in North America. We are also encouraged by its commitment to boost shareholder returns through higher dividend payouts.

 

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

 

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