The Zacks Analyst Blog Highlights: EPL Oil & Gas, Gulfport Energy, Southwestern Energy, Under Armour and Lockheed Martin

Feb 25, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Feb. 25, 2014 /PRNewswire/ -- 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 the EPL Oil & Gas, Inc. (NYSE: EPL-Free Report), Gulfport Energy Corp. (Nasdaq: GPOR-Free Report), Southwestern Energy Co. (NYSE: SWN-Free Report), Under Armour, Inc. (NYSE: UA-Free Report) and Lockheed Martin Corp. (NYSE: LMT-Free Report).

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

Here are highlights from Monday's Analyst Blog:

3 Oil Stocks to Explore as Q4 Wraps Up

The prospects of the oil industry, the Exploration and Production (E&P) sector in particular, are largely tied to the related commodities. The oil/natural gas-focused stocks thus stands to benefit from the recent momentum in crude oil and natural gas prices.

During the last few months, crude prices have mostly traded in the $95–$105 per barrel range on a positive demand outlook for heating oil amid below-normal temperatures that prevailed most of winter. Further support came from Janet Yellen's reassuring Fed commentary and strong January trade data from China.

Meanwhile, natural gas has also been on a tear. After hovering near the 3.5 per million Btu level for most of 2013, the prices have now spiked to around $6. The single most important contributor to this upward pressure was the powerful winter snowstorm in the U.S. and Canada that called for higher consumption of heating fuels.

Additionally, with rapid development and urbanization of emerging nations, energy demand is on the rise. The U.S. Energy Information Administration (EIA) foresees growth in global liquids consumption. Natural gas demand also shows a similar trend, spurred by its cost effectiveness and abundant supply in North America. The oil and natural gas producers are most suited to benefit from this opportunity.

With over 75% of oil sector companies having already reported, we lie in the last leg of the Q4 earnings releases. For those investors who have missed out on investment opportunities offered by the sector so far this earnings season, here are some options that can still be explored. 

Picking the Right Stocks

With the wide array of companies in the sector muddling up the stock picking power, the Zacks methodology could offer some relief. One could narrow down the list using the positive Zacks Earnings ESP as a guide, along with a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate.

Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.

Here are three E&P stocks that are poised to beat estimates according to our methodology:

EPL Oil & Gas, Inc. (NYSE: EPL-Free Report) has an earnings ESP of +15.15% and a Zacks Rank #3. The Zacks Consensus Estimate is pegged at 33 cents per share. 2013 marked a good year for EPL with stocks gaining over 18%.

Last month, the company made a $70.4 million acquisition, gaining properties in the shallow-water central Gulf of Mexico. These oil producing assets will add value to the company's existing portfolio. Additionally, the company announced growth in its oil assets, which could prove lucrative keeping in mind the oil price movement.

The Houston, Texas-based company is slated to release its fourth quarter results on Feb 27.

Gulfport Energy Corp. (Nasdaq: GPOR-Free Report) delivered positive earnings surprises in the trailing two quarters and the future looks bright with an earnings ESP of +11.11% and a Zacks Rank #3. The Zacks Consensus Estimate for the fourth quarter is 18 cents per share.

The stock has gained over 75% in the past one-year time frame. Moreover, last month, the company gave a stellar 2013 production update, stating 340% year-over-year growth. The company holds properties in the lucrative Bakken and Utica plays in addition to the Niobrara Formation.

The Oklahoma-headquartered company is set to report its fourth quarter results on Feb 26. 

Southwestern Energy Co. (NYSE: SWN-Free Report) had a superb 2013 having surpassed the Zacks Consensus Estimate in three out of four quarters. For the upcoming release, Southwestern has an earnings ESP of +1.92% and a Zacks Rank #3.

The stock has also soared over 30% in the last one-year time frame. Southwestern is engaged in the development and production of oil and natural gas, mostly in the U.S. 

The Houston, Texas-based company will release its fourth quarter results on Feb 27.

Bottom Line

Despite the volatile nature of the underlying commodities, the oil and gas sector is slowly but steadily growing on the back of ever-increasing energy demand. Moreover, with technological advancement, the E&P companies are able to generate higher production with lower costs, bringing in the much needed efficiency and profits. 

Under Armour Extends Speedskating Deal

Shares of Under Armour, Inc. (NYSE: UA-Free Report) rallied more than 5% on the index after the company announced renewal of its sponsorship deal for another eight years (up to Dec 31, 2022) with U.S. Speedskating. Shares touched a 52-week high of $114.22 on the same day before closing at $112.68.

The news came after the fiasco at the recently concluded Sochi Olympics, in which the company's state-of-the-art suits failed to meet expectations.  Under Armour had developed the new suits "Mach 39" with the help of the aerospace bellwether Lockheed Martin Corp. (NYSE: LMT-Free Report) to provide better flexibility to skaters.

However, after a dismal performance, skaters dumped these new suits as they felt they slackened their pace; they resorted to wearing the older suits. Noticeably, it did not help much as the teams (both Men and Women) continued to falter and could not even reach the quarter-final round.

With the Olympics controversy, it seemed that the company was heading towards a public relations debacle. Instead, it made an impressive turnaround by renewing its contract with the U.S. Speedskating to take the team through the next two Olympics, thereby boosting investor confidence. Under Armour had first obtained the sponsorship in 2011.

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

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