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Comstock Resources (CRK) on Growth Track: Time to Invest?


We issued an updated research report on Oil and Gas Exploration and Production company Comstock Resources Inc. CRK on Jan 12, 2017.

Comstock’s strong position in the prolific Haynesville/Bossier Shale play provides a highly visible and cost-effective production growth profile. Supported by its a low cost structure, Comstock remains well positioned to maintain a strong growth trajectory in the near-to-medium term.

As a result, Comstock Resources currently has a Zacks Rank #2 (Buy), which implies that the stock will outperform the broader U.S. equity market over the next one to three months.

Natural gas improving significantly from the 17-year lows it slipped to in March. Given that Comstock Resources is one of the most gas-weighted E&Ps, it is poised to see significant share price appreciation.

Comstock Resources, Inc. Price and Consensus

Also, Comstock Resources' strong acreage position in the prolific Haynesville/Bossier Shale play in East Texas and North Louisiana regions provides attractive reserve and production growth prospects. The company continues to deliver strong results from the Haynesville program. Production has increased substantially, while drilling costs have declined, resulting in improved margins. In fact, based on the quality of its Haynesville/Bossier assets, Comstock Resources expects to grow natural gas production 10-15% year-over-year in 2016 despite having limited capital available for drilling.

Additionally, the company has been able to reduce interest burden significantly through its debt exchange. Moreover, the transaction allowed Comstock to free up operating cash for investment in the high-return Haynesville shale drilling program.

Lastly, Comstock's decision to suspend its dividend might have been unwelcome for income investors, but provided the much needed stability to the balance sheet.

Stocks to Consider

Some better-ranked players from the broader energy sector include Braskem S.A. BAK, RPC, Inc. RES and Cheniere Energy Partners, L.P. CQP. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last four quarters, Braskem posted an average positive earnings surprise of 105.5%.

In the last quarter, Cheniere Energy Partners posted a positive earnings surprise of 185.71%.

In the last quarter, RPC, Inc. posted a positive earnings surprise of 14.29%.

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