Apache Corp. (APA) — This company explores for, develops and produces natural gas, crude oil and natural gas liquids. It is one of the largest independent exploration and production companies in the U.S., and it also holds interests in Canada, Egypt, Australia, the North Sea and Argentina.
It is currently focused on the Permian and Anadarko basins, where it operates 80 rigs and is guiding overall production growth of 3%-5%. In 2013, it sold off its Gulf of Mexico shelf assets and 33% of its stake in Egyptian assets.
S&P expects earnings to come in at $8.48 per share in 2013, but cut its forecasts for 2014 by $0.18 to $9.14 while sticking with a 12-month price target of $110. S&P expects APA to pay $2 billion in debt (18% of total) in 2013. Along with share buybacks, both should be accretive to NAV — a strong positive for stockholders.
Technically, after breaking out and running to a high of $94.84 on Nov. 21, profit-taking drove the stock down following the small reduction in its 2014 earnings estimate. There is a support band from $85 to $87.50 and additional support from its 200-day moving average at $83.43. MACD issued a buy signal on Monday. The trading target is $94, but investors should buy APA as a long-term holding.