Best stock bargains aftermarket bloodbath

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What if you could find an oil company that had amazing prospects for growth, and go back in time and buy it before those prospects became clear? I'd certainly jump at that chance. And it's why this stock may be the best bargain in the oil patch today. Here's what you need to know. Apache needs to invest in pipelines and other infrastructure to exploit its major Alpine High discovery.

It buys the mineral rights to patches of land -- or, in some cases, sea -- and extracts the oil and gas from those patches and sells it to make money.

However, because of the costs and the lead time involved, fluctuations in the price of oil hit upstream companies harder and more quickly than their midstream or downstream peers.

Indeed, since oil prices collapsed in , Apache's stock has fallen along with Conoco's and everybody else's:. APA data by YCharts. It's tough to pick out Apache's light blue line among all the other companies in this chart, except for one brief period: Starting in about September through the end of that year, Apache's price jumps higher than the rest before sliding back down again.

The reason for the jump was Apache's announcement of a massive oil and gas find in the West Texas Permian Basin, on a land position the company had been quietly building up on the cheap. Now, when I say massive, I mean at least 3 billion barrels of oil and 75 trillion cubic feet of natural gas.

10 Best Post-Brexit Stocks to Buy at a Discount Now - TheStreet

A lot of companies have holdings in the massive Permian Basin, a major oil and gas deposit in Western Texas and Southeastern New Mexico. ConocoPhillips, for example, owns 1 million acres there. Apache's big find, dubbed Alpine High, on the other hand, is located along the southwestern edge of the Basin. It's an area that most of the industry didn't think had much oil and gas potential. That's why Apache was able to buy up so much acreage so cheaply.

And now that everybody knows what kind of deposits are located underneath Alpine High, you can bet that nobody's going to sell any nearby land for the kind of prices Apache paid.

Of course, it was a huge gamble: The stock is trading for less today with Alpine High factored in than it was before Alpine High was announced. The latter seems far more likely. The market has some valid reasons for undervaluing Apache's stock.

10 Best Post-Brexit Stocks to Buy at a Discount Now - Pg.2 - TheStreet

But Apache has indicated that it's willing to devote significant amounts of money and time to bring Alpine High online, even if that means selling off other assets to do so. The market doesn't like that, because it means there will be a period of decreased production for the company after the other assets are sold but before Alpine High is fully operational. There's also the possibility that Apache has overestimated the amount of oil and gas at Alpine High, and that it's worth less than everyone assumes.

That's certainly a risk, but one that comes with any energy producer. Right now, investors have an opportunity to buy into Apache's Alpine High discovery at or near the pre-discovery price. Even though the oil and gas industry is on the rocks right now, such a move seems likely to reward patient investors. Those looking for some reassurance might want to wait until after Apache announces Q1 earnings in May, which will almost certainly include an update on Alpine High.

However, that earnings report could also send the stock up Either way, Apache is probably a buy. The Motley Fool has no position in any of the stocks mentioned.

The Motley Fool has a disclosure policy. John has found investing to be more interesting and profitable than collectible trading card games. He seeks growth and value stocks in the U. Skip to main content The Motley Fool Fool. Premium Advice Help Fool Answers Contact Us Login. Latest Stock Picks Stocks Premium Services.

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