SandRidge Energy (NYSE:SD) is an oil and natural gas exploration company that operates mainly in West Texas, Oklahoma and Kansas. Back in 2008, SandRidge was one of those commodity stocks that everybody wanted a piece of. It doubled from around $30 to over $60 … and then crashed with oil prices to under $10.
SandRidge might never get back to its previous share price. But the company is actually tracking a revenue number not seen since its 2008 peak.
Specifically, SandRidge estimates some $1.4 billion in 2011 revenue and over $1.6 billion in fiscal 2012. Back in 2008, SD came up a little short of $1.2 billion in revenue.
As for profits, that’s a bit trickier. The company has had some rough losses in the intervening years and should finish about breakeven when it reports full-year 2011 numbers. Revenue is nice, but it’s the earnings that matter.
SandRidge also warned in November that its full-year production for 2011 was going to decline due to trouble with operations in the Gulf of Mexico. RBC Capital Markets downgraded the stock from outperform to sector perform a few weeks ago as a result.
But RBC’s target is $10 a share — 25% higher than current valuations at $8. Also, though Gulf production hit a snag, it’s important to note that West Texas and other mid-continental operations actually grew in Q3 and should see continued improvement.
And let’s not forget that oil prices are once again around $100 and baseline energy demand isn’t going down anytime soon.
SandRidge is a risky growth play, like so many other energy exploration and service companies. But this cheap stock has the potential to break out in 2012.
Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace??.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.