XTO Energy (NYSE: XTO), a major oil and natural gas producer, has agreed to shell out $4.2 billion for privately held Hunt Petroleum. The deal is expected to add about 1.052 trillion cubic feet of natural gas reserves, located primarily in Texas, Louisiana and the Gulf Coast, to XTO's supplies.

XTO has been quite acquisitive lately. Only in late May, XTO agreed to pay $1.85 billion for Headington Oil Co., which may have 4.3 billion barrels of recoverable oil.

Yes, such deals are a wonderful way to bulk up for growth. Actually, XTO is projecting production growth of 28% to 30% for this year.

As for Hunt Petroleum, it's a legend in the oil business -- going back 80 years. But late last year, the board retained Goldman Sachs (NYSE: GS) to seek out a buyer (I'm sure the Hunt family was looking for some liquidity, especially in light of the surging energy market).

And so far, Wall Street likes the deal. In today's trading, XTO's shares are up 3% to $69.93.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

This morning I posted on five stocks that might be worth buying in New York society doyenne, Brooke Astor's $23.5 million portfolio of 15 stocks. But with Spring finally sprung, which ones should she clean out of her portfolio?

This is the question a CNBC producer posed to me after reading the Astor post. I'll be appearing tonight at 7:15pm with Melissa Francis's On The Money. Here are the three stocks I would clean out of Brooke Astor's portfolio:

• Encana Corp. (NYSE: ECA), the Canadian gas producer, is overpriced given shrinking earnings expectations. ECA had $16.4 billion in sales -- up 16% -- and $5.1 billion in profit -- down 66% -- in the last year. Its earnings are expected to decline 7.8% to $4.01 next year and its P/E of 8.6 seems high given the earnings decline. Encana has a dividend yield of 1.6% and it rose 4.3% in the last year.
• XTO Energy (NYSE: XTO), the Texas oil and gas producer, is also overpriced given shrinking earnings expectations. XTO had $4.6 billion in sales -- up 30% -- and $1.9 billion in profit -- down 5% -- in the last year. Its earnings are expected to decline 0.4% to $4.55 next year and its P/E of 10.9 seems high given the earnings decline. XTO's dividend yield is 0.89%.and it rose 4.3% in the last year.
• Morgan Stanley (NYSE: MS), the investment bank, is pricey given its low earnings growth expectations. MS had an explosive 2006 -- with $83.2 billion in sales -- up 47% -- and $8.4 billion in profit -- up 59%. Its earnings are expected to rise a mere 3.8% to $8.18 next year and its P/E of 10.1 yields a lofty PEG ratio of 2.65. MS has a dividend yield of 1.33% and it rose 29% in the last year.

Of the three, MS is Astor's biggest holding and if its earnings exceed these low expectations the stock could do quite well. But given all the uncertainty in the mortgage markets -- to which MS is exposed -- I'd suggest Astor lighten up on MS as well.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.