Chesapeake Energy Corporation (NYSE: CHK) is engaged in the acquisition, exploration, and development of properties for the production of natural gas and crude oil. The firm is the second-largest independent producer and third-largest overall producer of natural gas in the United States. Company properties are located in the US midcontinent region, along the Gulf Coast, in the Permian Basin, and in the Ark-La-Tex region. It owns interests in nearly 39,000 producing wells and has nearly eleven trillion cubic feet equivalent of proved reserves.

Chesapeake pleased investors last week, when it announced that it had formed a joint venture with Goodrich Petroleum (NYSE: GDP) that would give it working interests in deep strata of the Haynesville Shale of East Texas and Louisiana. The move is expected to make Chesapeake the largest U.S. natural-gas producer, pushing it past BP (NYSE: BP) and Anadarko Petroleum (NYSE: APC).

The CHK share price popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with ten "strong buys," eight "buys" and nine "holds." The CHK Price to Book ratio (3.32), EPS Growth rate (25.29%), Operating Margin (26.31%) and Net Profit Margin (13.55%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 79% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $31.38 and $68.10. A stop-loss of $54.50 looks good here. Note that the firm is next expected to report quarterly results in late July.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.