JJC:    Since this is Green Week, it would be totally remiss of my not to talk about one of the cleanest, greenest, and most profitable sources of energy around... natural gas.

Remember, this is the year of natural gas... So far, natural gas has been en fuego... and I think it's only going to get better. Natural gas is the replacement fuel. As oil and coal get much more expensive, people buy more natural gas... and we all know that oil and coal are plenty expensive.

Today, I've got a natural gas company that, in addition to having great fundamentals, is also one of those catch-up stocks... like I like to talk about... You know, the stocks that have lagged their sector, and need to catch up...

The stock is the aptly named El Paso Corp. (EP*)... and it's both a natural gas pipeline and an exploration company...

#1 in the business, and an exploration and production company... With both the pipeline side and the exploration side, EP is truly an all-in-one company...

With the stock at almost $18, I think it's a steal... You see, on average, EP's peers are up an average of 31.4% year-to-date. But EP is up only 3.2%... probably because the combination of pipeline and production makes it confusing to investors. Remember how everybody really wants it simple... they want to spoon feed it... they want a pure play? Well, there's been some talk of splitting the two businesses to better unlock value. I know I would like that.

EP has been overlooked. Think of it as a silent, but deadly, play on natural gas...

If it catches up to its competitors, this almost-$18 stock should be valued at around $22, and pretty easily. I like EP so much that I bought it for ... And that's about the highest praise I can bestow on a stock...

As a true connoisseur of all things gas, I can tell you that this company is just not getting the credit it deserves. It's exploration and production division (E&P) which finds gas - as opposed to the pipeline business that merely passes gas - is firing on all cylinders. This part of the business grew earnings before interest and taxes at 92% year-over-year in the fourth quarter. I mean, that's spectacular growth.

EP's been consistent about producing double-digit revenue growth here too. And it's cash operating costs are falling. This is a business that's improving, even as it's already pretty darn good the way it is...

Another improvement... back in March, EP sold some of its lower margin - meaning it didn't make as much money on the sales - natural gas reserves for $650 million. They paid down debt... and they had taken on a lot of debt to buy People's Energy Production. I think it's a smart deal that they did...

Now, when it comes to passing gas... that side of things... where EP is already a leader in the pipeline game, it's got firm customer commitments... that's how you judge these things... to invest $4 billion to expand its pipeline network.

But I like EP for more than just its natural gas. It's got great leadership. It's CEO, Doug Foshee... Foshee came in and saved the company, basically, back in 2003... just two years after its energy trading and power generation business had fallen apart... I don't want to relate this to... well, you know... I'm not even going to mention the names of some of the companies that were corrupt in that business, but this company was lumped in with them... and that's all changed because of Foshee. He's been doing some insider buying. Enron? NOT!...

About a month ago, he bought 50,000 shares of EP. I've said this before, but it's worth repeating... Insiders sell for many reasons, but they only buy because they think their stock is going higher.

EP is the cheapest natural gas play out there, in the year that I told you is the natural gas year. Is it ready to join the sweet sextet of Devon, Apache, XTO (XTO*), Anadarko (APC), Southwestern (SWN), and Chesapeake (CHK)?... Is it ready to form the Magnificent Seven of natural gas?... 
 

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The Bottom Line!:      El Paso Corp. (EP*) is the cheapest natural gas play. It's got exploration and production... it's got pipelines... We like both, and we want to own this stock.