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On Apr 17, Zacks Investment Research upgraded Cabot Oil & Gas Corporation (COG - Analyst Report) – an independent energy exploration and production (E&P) company – to a Zacks Rank #2 (Buy).

Why the Upgrade?

Cabot witnessed rising earnings estimates on the back of excellent fourth-quarter 2012 results. Moreover, this Houston, Texas based company delivered positive earnings surprises in the last two quarters with a beat of 14.3% and 13.3%, respectively. The long-term expected sales growth rate for this stock is 5.4%.

On Feb 21, 2013, Cabot reported strong fourth-quarter 2012 results, owing to enhanced output and higher crude oil prices. The company posted fourth-quarter earnings per share of 24 cents, comfortably beating the Zacks Consensus Estimate of 21 cents. The quarterly figure also improved 50.0% from the year-earlier profit of 16 cents.

Moreover, Cabot’s year-end 2012 proved reserves increased 26.7% year over year to 3,842.4 billion cubic feet equivalent (bcfe), which marked the third successive year of reserve growth of above 20.0%.  

Additionally, Cabot’s diversified asset portfolio is spread between low-risk/long reserve-life Appalachian assets and large-volume/rapid-payout Gulf Coast properties, with further variety from large prospect inventories in the Rocky Mountains and the Anadarko Basin that have a broad mix of production and payout profiles.

As a result of these bullish factors, the tendency for an upward estimate revision has been obvious in recent times. The Zacks Consensus Estimate for 2013 has increased by 3.8% to $1.38 per share, over the last 30 days.

Stocks to Consider

Other oil and gas exploration and production companies that are expected to significantly outperform the broader U.S. equity markets in the next one to three months are EPL Oil & Gas Inc. , Cheniere Energy Inc. (LNG - Snapshot Report) and Range Resources Corporation (RRC - Analyst Report). All three stocks carry a Zacks Rank #1 (Strong Buy).   

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