Oil and Gas Plays to Energize Your Portfolio

Tickers in this article: HES LINE

Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust -- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.

Why, just the other day in a mighty interesting article titled "Four Deals in the Oil Patch?" Cramer waxed eloquent on his latest take on LINE:

Linn's been a leader in developing properties cash off by others, including BP and then quickly bringing great returns to shareholders. I love that Linn offered Linn Co, with its bountiful 7% plus yield for non-taxable accounts. The company's growing its holdings like weeds, yet it stays at a ridiculously low $7 billion valuation.

On Thursday, LINE's shares rose to $37.33 on a huge spike in volume, bringing the market cap up to $7.45 billion. As the five-year chart below illustrates for our viewing pleasure, LINE has come a long way, and with the one-year analysts' consensus estimate price target of over $44, has even more room to rise.

LINE ChartLINE data by YCharts

As you can see from the chart above, the last reported quarter saw a drop in revenue per share, so when LINE steps into the earnings confessional on Feb. 21 it better show improvements and guide well. In fact, the analyst consensus estimate for sales growth and revenue for this latest quarter is for an increase of almost 72%. The company will also have a fourth-quarter earnings conference call at 11 a.m. ET on Feb. 21.

The average estimated revenue for 2012 is for a total of $1.72 billion, an impressive 48% increase over revenue in 2011. In 2013 analysts are anticipating more sales growth with annual revenue expected to increase yet another 40%.

Also in the energy sector and still on sale is Hess (HES) , an integrated energy company that is considered a "take-apart" candidate where the sum of the parts are likely to be worth more than the whole. Even though it pays a puny dividend, this potential for lucrative spinoffs from the company is the big prize!

TheStreet's research department rates HES a buy, stressing, "The company's strengths can be seen in multiple areas, such as its compelling growth in net income, increase in stock price during the past year, attractive valuation levels, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins."

You can see from the five-year chart below that HES's share price and quarterly revenue per share have moved in virtual lockstep. It also indicates to me the stock price has room to soar on the upside.

HES ChartHES data by YCharts