Zacks Investment Ideas feature highlights: Marathon Petroleum, Transglobe Energy and Ensco

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Mar 15, 2013, 09:30 ET

CHICAGO, March 15, 2013 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Marathon Petroleum (NYSE:MPC), Transglobe Energy Corporation (Nasdaq:TGA) and Ensco plc (NYSE:ESV).

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3 Energy Stocks with the Magic Combination

As Wall Street shuns energy, that creates an opportunity for investors. A lot of energy companies are trading with low P/Es. Additionally, there are a select few that are also expected to grow earnings by the double digits in 2013. These companies are being lumped in with all the other energy companies in the "bad" category.

Using the Zacks Rank, I also looked for energy plays that had the magic combination of value AND growth. That means stocks with forward P/Es under 10 and double digit earnings growth expected in 2013. They DO exist.

Marathon Petroleum (NYSE:MPC)

Marathon Petroleum was spun off from Marathon Oil in July 2011. It owns 7 refineries in the Gulf Coast and Midwest and distributes refined products.

Most of the refining stocks rallied big in 2012 and have continued that rally again into 2013. But the analysts still like Marathon mainly due to its position with both Midwest and Gulf Coast refineries. It's going to be able to play the North American crude dynamics, instead of the WTI crude spread that many other refiners have been tied to. It has been cashing in on discounted heavy Canadian crudes.

The Magic Combination

Forward P/E = 8
2013 Expected Earnings Growth = 11.2%
PEG ratio = 1.1
Zacks Rank #1 (Strong Buy)

Transglobe Energy Corporation (Nasdaq:TGA)

Transglobe Energy is a Canadian exploration and production company with interesting ins Egypt and Yemen. It has 9 international blocks with active exploration and development drilling already underway.

In Egypt it has a 50-100% operated and non-operated interest in 5 concessions in Egypt. In Yemen, it has a 13-25% working interest in several blocks.

For exploration companies, it's all about getting it out of the ground. Production grew by 44% in 2012 to 17,496 barrels of oil per day ("Bopd") from 12,132 Bopd.

Transglobe is bullish on 2013 with production expected to rise another 28% to a range of 21,000 to 24,000 Bopd.

The Magic Combination

Forward P/E = 6.4
2013 Expected Earnings Growth = 20.5%
PEG ratio = 0.2
Zacks Rank #2 (Buy)

Ensco plc (NYSE:ESV)

Ensco operates 76 offshore rigs mainly in the Gulf of Mexico and the North Sea. Headquartered in London, its fleet includes 7 ultra-deepwater drillships, 13 semisubmersibles, 7 moored semisubmersibles and 49 jackups.

Offshore drilling has been hot. Ensco said it received 60 inquiries for jackups and floaters in the fourth quarter but it couldn't bid on 25% of the business due to lack of rig availability.

Analysts, and the company, are optimistic about 2013. Ensco just raised its dividend by 33% to $0.50 per quarter. That's a yield of 3.5%.

The Magic Combination

Forward P/E = 8.5
2013 Expected Earnings Growth = 24%
PEG ratio = 0.3
Zacks Rank #3 (Hold)

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