The Zacks Analyst Blog Highlights: Cobalt International Energy, Bonanza Creek Energy and Diamondback Energy

For Immediate Release

Chicago, IL – October 20, 2014 – 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 the Cobalt International Energy Inc. (CIE-Free Report), Bonanza Creek Energy Inc. (BCEI-Free Report) and Diamondback Energy Inc. (FANG-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:

Crude Oil on the Rebound: Buy These 3 E&Ps

Yesterday, the U.S.-traded West Texas Intermediate (WTI) crude futures got some respite from a four-month slump, with the benchmark advancing 92 cents to $82.70 a barrel, bouncing back from $79.78 earlier in the session, the first drop below $80 since June 2012.
The Oil Slide: Ample Supply vs. Weak Demand

Despite the recovery, crude price is still down approximately 25% from its 2014 high in June. The commodity is reeling from the effects of booming shale supplies in North America, weakening growth in China and a stagnant European economy. Moreover, a stronger dollar made the greenback-priced crude dearer for investors holding foreign currency.

On top of that, OPEC members (like Saudi Arabia) have made it clear that they are more intent on preserving market share rather than attempting to arrest the price decline through production cuts. Finally, the downward slide was precipitated by a recent forecast from the Paris-based International Energy Agency (:IEA) – a major energy consultative body of industrialized countries – which projects that oil consumption this year will increase at the slowest rate in five years.

Reasons for Yesterday’s Rebound

Thursday’s breather by the oil market came on the back of mixed data from the U.S. Energy Department's weekly inventory release. Though crude inventories jumped by a higher-than-expected 8.92 million barrels for the week ending Oct 10, 2014, supplies of gasoline fell by 4 million barrels to reach their lowest level in almost two years. Some technical trading ahead of options expiry for U.S. crude also helped stabilize the market.

Lack of Consensus on Future Direction

Considering the topsy-turvy world of fluctuating oil prices, only time will tell where it will go next. As of now, there’s real disagreement between market analysts as to whether the nascent rally would take the commodity higher.

3 Stocks to Consider Buying

For investors who see yesterday’s oil price recovery as a prelude to a big rebound, we present three companies that may deserve attention. Each of them also has a good Zacks Rank.

Cobalt International Energy Inc. (CIE-Free Report): It is a leading oil-focused deepwater exploration and production company with major presence in the U.S. Gulf of Mexico and offshore Angola and Gabon. This Houston-TX based Zacks Rank #1 (Strong Buy) upstream operator’s rich assets and several high-impact exploration success results helped it deliver positive surprises in 3 of the last 4 quarters with an average beat of 9.41%.

With exciting new ventures set to create more exciting drillable prospects, Cobalt International, which jumped 4.7% in Thursday’s trading, is nicely poised to further expand into the deepwater market.

Bonanza Creek Energy Inc. (BCEI-Free Report): Denver, CO-based Bonanza Creek conducts oil and gas finding operations primarily in the liquids-rich acreage of the Rocky Mountains and the Mid-Continent regions. In addition to trading around 21.2 times forward estimates (substantially under the peer group average of 27.83), the company sports a trailing 12-month return on equity (:ROE) of 11.7% – against its peer group average of just 2.2%.

This speaks to Bonanza Creek Energy’s efficient management that has consistently maintained a solid balance sheet with low leverage. Bonanza Creek, which surged 8.3% yesterday, currently has a Zacks Rank #2 (Buy).

Diamondback Energy Inc. (FANG-Free Report): A Zacks Rank #2 stock that was up 5.2% yesterday, Diamondback Energy is an independent exploration and production company engaged in the acquisition, finding and development of unconventional onshore oil and gas properties. The Midland, TX-based company’s operations are concentrated primarily in the Permian Basin of West Texas.

Having done a stellar job at raising production and reserves from its assets, analysts are predicting strong earnings growth for Diamondback over the next couple of years. The 2014 Zacks Consensus Estimate is $2.62, representing 109% earnings per share growth over 2013. Next year’s average forecast is $3.89, corresponding with 48% growth.

Bottom Line

While all crude-focused stocks stand to benefit from recovering commodity prices, companies in the exploration and production sector are the best placed, as they will be able to extract more value for their products.

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

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on CIE - FREE
Get the full Report on BCEI - FREE
Get the full Report on FANG - FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Read the analyst report on CEI

Read the analyst report on BCEI

Read the analyst report on FANG


Zacks Investment Research