Zacks Bull & Bear of the Day Highlights: Agrium, Priceline.com, EnCana, EOG Resources and Chesapeake

Business Wire, Jan 9, 2009

CHICAGO -- Zacks Equity Research picks Agrium Inc. (NYSE: AGU) as Bull of the Day and Priceline.com (Nasdaq: PCLN) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on EnCana (NYSE: ECA), EOG Resources (NYSE: EOG) and Chesapeake (NYSE: CHK).

Full analysis of all these stocks is available at: http://at.zacks.com/?id=2678

Bull of the Day

Agrium Inc. (NYSE: AGU), based in Alberta, Canada, is a major retailer of agricultural products and services in North and South America, a leading global wholesale producer and marketer of all three major agricultural macronutrients such as nitrogen, potash, and phosphate, and a premier supplier of micronutrients and specialty fertilizers.

Agrium is growing through acquisition and organic expansion. The acquisition of United Agri-Products is driving revenues and profits supported by an expanded product line in the major business segment. However, the company is witnessing weak demand and prices for its fertilizers.

Nonetheless, Agrium expects the fall in demand and prices to be temporary. The company has reaffirmed its earnings guidance for the second half of fiscal 2008. The company also has a significant free cash flow. Therefore, we rate the shares a Buy with a target of $43.00.

Bear of the Day

We are downgrading Priceline.com (Nasdaq: PCLN) from Hold to Sell. In our opinion, the stock's recent move from the high $40s to about $80 (a rally of around 65%) should be sold.

Recall that the company indicated that it began experiencing an accelerated deterioration in European travel in the third quarter. Global economic conditions have not improved since that time, and Zacks Investment Research believes the global slowdown will accelerate in 2009.

As a result, the headwinds impacting the online travel-related services market will persist, and that will pressure Priceline.com's results. We think the stock should trade around $60, which is a more reasonable multiple of 16x our 2009 EPS estimate and 10x our 2009 pro forma EPS estimate.

Recent Analysis from the Analyst Blog

Weather Adds to Natural Gas Woes

This is a bearish report for natural gas prices, adding to the long list of issues weighing on the commodity. Natural gas prices rallied earlier last year, reaching over $13 per million Btu (MMBtu) in July 2008, before trending down. Prices have since dropped sharply to the current level of under $5.50 per MMBtu (we are referring to Henry Hub spot prices here).

Keeping prices low is a combination of soft demand due to the economic downturn and strong supplies due to increased production from a number of unconventional natural gas fields. And unfavorable weather, as during the week in question, does not help either.

While favorable temperatures during the heating season should help natural gas prices to some extent, the overall outlook continues to remain weak. The commodity's weak near-term outlook, coupled with the ongoing credit market turmoil, has prompted exploration and production players (natural gas producers) to curtail capital expenditure plans for 2009. These curtailments are expected to self-correct natural gas' supply-demand fundamentals later this year.

As such, we foresee a much more favorable environment for exploration and production companies towards the end of this year and into 2010. Our preferred E&P names, such as EnCana (NYSE: ECA), EOG Resources (NYSE: EOG) and Chesapeake (NYSE: CHK) own quality assets that enable them to cost effectively operate even in a low-price environment. Additionally, these companies have already hedged substantial portions of their expected production levels this year at much higher prices. This significantly lowers their exposure to the current low prices.

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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