On Dec 23, Zacks Investment Research upgraded natural gas-focused energy company, Questar Corporation (STR), to a Zacks Rank #2 (Buy).
Why the Upgrade?
The demand for natural gas usually shows an uptick during winter as compared to other seasons as both residential as well as commercial consumers seek space heating. Hence, we believe that Questar’s overall business will improve over the approaching winter months.
In a separate development, last week Wexpro Company – an affiliate of Questar – expended around $52.5 million for the acquisition of additional interest in a natural gas-linked acreage. The acquired properties lie in the Canyon Creek Unit of southwestern Wyoming's Vermillion Basin, the core-region of Wexpro’s operations.
With this deal, Wexpro will have 100% ownership of the acreage, up from its current 70% stake. Moreover, the acquisition has enhanced the company’s net proved developed reserves by about 40 billion cubic feet equivalent (Bcfe).
Questar pays an annual dividend of 76 cents per share, highlighting a stable yield of 3%. The company raised its dividend payout by 6% in May 2014, marking the 42nd dividend increase. Questar has a long and consistent dividend paying record. Notably, the company has paid consistent dividends in each of the last 279 quarters.
Meanwhile, over the last four quarters, Questar’s average earnings surprise stood at around 7%.
Banking on these positives, the Zacks Consensus Estimate for 2014 rose by more than 2% to $1.30 per share over the last 60 days as majority of the estimates (5 out of 6) were revised upward.
Other Stocks to Consider
One can also consider players in the energy sector like Sandridge Mississippian Trust II (SDR), SandRidge Mississippian Trust I (SDT) and Seadrill Partners LLC (SDLP). All the stocks sport a Zacks Rank #1 (Strong Buy).
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