It should not come as a surprise to many that as crude oil pushed $120 per barrel and gas prices passed $4 a gallon at the pump Anadarko Petroleum (NYSE: APC) reached a new 52 week high of $71.12 and finished Tuesday at $70.07. The stock is up over 75% (not including the dividend) since I recommended it last year.
At the time I disclosed that I acquired the stock at $40 and suggested this was a keeper. I like the fact that the company has a substantial amount of its proven oil and natural gas reserves in North America. It also pays a modest dividend 0.52% while sporting a P/E under 9 (TTM). When last I posted on the subject -- Serious Money: great picks: Aluminum Co. of China & Anadarko -- about ten weeks ago, APC was trading at $55, down from its previous high, though still returning a nice gain. That was the time to buy on the dip if you were watching it.
For now I would not be jumping into APC at its high, but I would once again recommend that investors put it on their watch lists because nothing goes straight up and another opportunity could arise.
The runup in the stock has pushed certain metrics above the bargain values they have been in, but APC it is still maintaining a 24% profit margin and a 25% return on equity. It has surprised me that Anadarko has not been acquired for its reserves by a larger player, but the higher than usual debt load may be a deterrent.
Earlier in the week, I posted Chasing Value: PDS up 75% in Q1, announces distribution regarding Precision Drilling Services TR (NYSE: PDS), which does not get much press but has appreciated as much as APC, and much faster. Now I'm pondering if I will be so fortunate again soon in this very difficult market, stay tuned...
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of APC & PDS.
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