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In fact, since April 2011 Apache shares are down by 44%. Compared to its peers, that makes Apache what's known as a "laggard."
But there is more here than meets the eye, since it is very hard to find anything to nit-pick when it comes to their financials.
Fundamentally speaking, the company seems on solid ground, which is why I'm willing to buy Apache shares.
In fact, even after an $18 billion flurry of acquisitions over the last couple of years, Apache's balance sheet still remains strong while adding new layers of growth potential.
And as one of the world's largest independent energy companies, Apache continues to report healthy cash flows, strong profit margins, and has a forecasted sales growth of 8.1% for 2013.
So why haven't investors been willing to buy, even when the company appears to be doing all the right things?
The answer is two-fold: Oil prices and the skittish political situation hovering over their oil rigs in Egypt.
Apache's Correlation to Oil Prices
First there's the price of oil and the ability to hedge it.
Larger oil companies such as Chevron Corp. (NYSE: CVX) and Exxon Mobil Corp. (NYSE: XOM) are able to smooth out the price they receive for oil by hedging future oil prices. This, theoretically, allows them to give investors more stable — but lower –returns.
Apache, on the other hand, doesn't hedge much at all. In fact, for 2013, Apache's oil production is only about 15% hedged — with hardly any hedging at all in future years.
Considering 81% of Apache's revenues are generated from oil and natural gas liquids, it is plain to see why the performance of the stock is very much tied to the price of oil.
So the million dollar question becomes: Where are oil prices going?