Is Chesapeake Energy a Buy with a New...
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May
21
Jonathan Yates
Is Chesapeake Energy a Buy with a New CEO?
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In a previous article on this site, “Is Chesapeake Energy a Stock to Buy on the Dips?,” the long term potential of Chesapeake Energy (NYSE: CHK), a natural gas firm, was highlighted.

Since that article, Chesapeake Energy has selected a new chief executive officer, Robert Douglas Lawler.  His selection lifted the stock higher, as he is regarded highly within the industry.  In addition, Chesapeake Energy has been dragged down by corporate governance issues.

But as the chart below shows, Chesapeake Energy is starting to recover.  While the stock market has been strong, oil and natural gas are particularly in demand.  Even though other commodity prices such as copper have fallen, both natural gas and oil are holding up well.

Over the last month of market action, Chesapeake Energy is up by 11.89%%.  For growth investors, sales and earnings growth is up very sharply for Chesapeake Energy on a quarterly basis.  With a price-to-book ratio of 0.89, Chesapeake Energy is selling at a discount, which is always appealing to value investors.  Over the next five years, earnings-per-share growth is projected to rise more than 30% annually.

Now trading for around $21.13, the mean analyst target price for Chesapeake Energy over the next year is $22.37.  Over the last year, it has risen more than 50%.  The stock price is now close to its 52-week high.  Almost 80% of the shares are owned by institutions, which is very bullish.

With a beta of 1.33, Chesapeake Energy is a volatile stock.  There could be a decline coming after the recent bullish announcement of the new CEO.

 



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