Money Morning's "unloved" pick of the week is oil and gas exploration and production company Apache Corp. (NYSE: APA).
An unloved investment is one that's been beaten down – but is actually a great value. Investors then get an amazing entry point into a good long-term investment.
Money Morning Chief Investment Strategist Keith Fitz-Gerald recommended Apache stock last week, calling it a "hated stock" that presents a "terrific opportunity" for investors.
Apache Corp. (NYSE: APA): About the Company
Apache explores for, develops, and produces crude oil and natural gas. Founded in 1954 in Minneapolis, the company drilled its first wells in Cushing Field in Oklahoma. Apache moved its headquarters to Houston in 1991 following its acquisition of MW Petroleum from Amoco. It has operations in Australia, Canada, Egypt, and the U.K. as well as the United States. APA has a market cap of just over $24 billion. The company employs about 5,300 people.
Apache Corp. (NYSE: APA) Stock: Why It's Unloved Right Now
The primary cause for the dramatic sell-off in Apache stock – falling oil prices – is both logical and obvious. APA stock got hit especially hard, though. After hitting a 52-week high of $104.57 on July 31, Apache stock started a 48% slide that ended with a 52-week low of $54.34 on Dec. 16.
With oil plunging, the bad news snowballed. In early November Apache reported a loss of $1.24 billion in its third quarter due to property write-downs and tax adjustments. Even excluding that, earnings fell to $1.38 from $2.32 a year earlier with revenue down 19%.
In early December, Apache was hit with downgrades from Zacks Investment Research and Mizuho Securities. Both expressed concerns about lower commodity prices. Several other analysts slashed their price targets for APA stock. Macquarie lowered its target from $96 to $66; JPMorgan Chase & Co. from $86 to $67; and UBS from $81 to $69.