Encana Corporation (ECA)

[Timothy Smith]

Prior to the plummet in natural gas prices, in 2009 Canadian gas giant EnCana reported $2.48 in earnings per share. The prior year it reported close to $6 in EPS.

Suggesting EnCana returns to these former profit peaks is unlikely in the near-term, but does illustrate its ability to generate significant returns for shareholders in a more normal pricing environment. It is currently shifting to natural gas liquids from dry natural gas that is most commonly quoted in the marketplace.

A move more toward oil could also help in the near-term. Longer-term, this is again an asset play. Stated book value was recently around $22 per share, or right at the current stock price. This clearly underestimates the market value of its production assets, but could indicate a floor on the stock.

Analysts project a full year sales decline of 33% to below $6 billion and profits under $1 per share, but there is again recovery potential on most operating fronts.