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Strong Buy on Atlas Energy

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On Jul 2, Zacks Investment Research upgraded Atlas Energy, L.P. to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

This natural gas utility delivered positive earnings surprises in three out of the last four quarters with an average beat of 1.6%. The long-term sales growth of the company is presently pegged at 9.69%.

Atlas Energy is expected release its second quarter earnings results in the next month. Our earnings projection for the quarter is presently pegged at 83 cents, which increased 196.4% in the last 60 days. This reflects a projected year-over-year growth rate of 653.3%. Atlas Energy reported both top- and bottom-line beats in the previous quarter.

The first half of 2013 was quite productive for Atlas Energy. In the first quarter the partnership registered a 240% year-over-year increase in total production. The partnership’s presence in resource rich regions and strong performance of its E&P subsidiary, Atlas Resource Partners, L.P. and midstream subsidiary, Atlas Pipeline Partners, L.P. will allow it to sustain this performance in the latter half.

In Jun 2013, Atlas Energy’s E&P subsidiary decided to acquire 466 billion cubic feet (Bcf) of gas from a subsidiary of E&P Energy LLC.  In addition, Atlas Energy will also acquire 45 Bcf of proved natural gas reserve from E&P Energy LLC.

These acquisitions will further boost the cash flow of the partnership. The partnership in fact raised its 2014 distribution guidance to the range of $2.50 to $2.80 per unit, up 115% from the current annualized rate of $1.24 per unit.

The Zacks Consensus Estimate for 2013 increased 136.3% in the last 60 days to $3.38 per share, reflecting a whopping year-over-year increase of 3,855.6%. The Zacks Consensus Estimate for 2014 increased 40.8% in the last 60 days to $4.21 per share, reflecting year-over-year projected growth of 24.6%.  

Other Stocks to Consider

Besides Atlas Energy, Cheniere Energy Partners LP. (CQP - Free Report) also has a favorable Zacks Rank among others operating in the industry.  Cheniere Energy presently carries a Zacks Rank #1 (Strong Buy).

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