Anadarko Petroleum Corporation (APC)

[OilStockReport]

Anadarko Petroleum Corporation (APC) is one of the world’s largest independent oil and gas exploration and production companies. It markets natural gas, crude oil, condensate, and oil and natural gas liquids (NGLs), as well as owns and operates natural-gas gathering, processing, treating, and transportation systems.

The stock comes second in our list with a year-to-date return of 8%. The company’s financial performance during the last five years reflects its heavy exposure to the international oil prices. In terms of revenue, though APC registered a net 5-year CAGR of 12% (2005-2010), there are significant variations in between which are almost identical to international oil price movements.

More importantly, in times of rising oil prices (2006-2008), the company’s profitability followed its sales pattern almost exactly; however, this relationship has weakened during the last two years which shows certain shortcomings in adjusting its cost structure required to maintain the past margins. However, this transition is expected to be completed in the current year as the company is all set to grow its bottomline by 77%.

In addition, the stock has kept its “premium” momentum over its closest competitors, Apache Corporation (APA) and Canadian Natural Resources Limited (CNQ), since July 2011 which is expected to sustain on the back of rising oil prices internationally.