2020
عضو نشط
- التسجيل
- 5 فبراير 2012
- المشاركات
- 716
4 Oil Penny Stocks to Watch
By Dan Moskowitz | April 10, 2015
http://www.investopedia.com/articles/investing/041015/4-oil-penny-stocks-watch.asp?partner=YahooSA
Oil has suffered greatly over the past six months and you have likely read about oversupply being the key factor. Oversupply is a factor, but reduced global demand is the real culprit. Since we are now living in the early stages of a deflationary environment, oil prices are likely to decline further. To be fair, I’m currently shorting a few sectors of the market. I’d rather be bullish, but based on my research, prolonged record low interest rates has led to massive debt bubbles. Deleveraging will eventually need to occur, which will help fuel deflation.
The above points have been provided in order to warn you that this isn’t likely to be the best time to invest in any of the companies listed below. On the other hand, oil should bounce back several years from now. If a company on the list below survives through the worst of times, it will present a bargain-basement price where you could see parabolic gains down the road. But use caution and follow these companies carefully. They are penny stocks for a reason. (For more, see: The Lowdown on Penny Stocks.)
Halcón Resources
Halcón Resources Corporation (HK) is a drilling and exploration company that has consistently grown its top line on an annual basis and delivered a profit in fiscal year (FY) 2014. Total operating revenue last year was $1.1 billion versus $999.5 million in the prior year. In FY2014 average daily production jumped 26% year over year. The stock's 52-week range is $1.06 - $7.50 and current price (as of April 6, 2015) $1.85.
To understand the company’s potential, below is a quote from its latest Securities and Exchange Commission (SEC) filing:
“Our oil and natural gas assets consists of undeveloped acreage positions in unconventional liquid-rich basins/fields. We have acquired acreage and may acquire additional acreage in the Bakken/Three Forks formations in North Dakota and the Eagle Ford formations in East Texas, as well as several other areas.”
The problem is that Halcón relies heavily on commodity prices for production, and based on the points above, times are likely to get worse before they get better. That said, if the company can weather the storm, this would be a tremendous buying opportunity in the future. As a side note, insiders have been buying the stock in recent months. (For more, see: Are These Oil Stocks Heading to the Abyss?)
SandRidge Energy
SandRidge Energy Inc. (SD) was profitable in FY2014 but revenue suffered. It should also be noted that the stock has seen no consistent appreciation for many years. If that’s the case during a raging bull market, then odds are slim that this will take place if the market becomes more challenging. On a related note, Barclays recently set a $0.50 price target on the stock. SandRidge Energy plans on cutting its capital expenditure by at least 50% and significantly reducing its rig count this year. These moves aren’t likely to be enough to offset the reduced production, which might lead the company back to the red in FY2015.
Once again if SandRidge can weather the storm, it will present massive long-term potential. This is a time to watch the stock, not to buy it. Its 52-week range is $1.13 - $7.43 and current price $2.02. (For more, see: Is it Time to Give Up on SandRidge Energy?)
Vantage Drilling
Vantage Drilling Company (VTG) plans to buy back more of its debt in order to reduce the interest impact. This is after the company retired nearly $200 million in debt in FY2014. CEO Paul Bragg recently mentioned a vessel glut due to order cancelations which relates to failing oil prices. He also said that 2015 and 2016 would be difficult, but that when demand returns there would be a rig shortage.
Vantage Drilling has been profitable over the last four quarters, but a debt-to-equity ratio of 4.91 in this environment makes this an even higher risk play than the stocks mentioned above. VTG has ranged between $0.30 - $2.02 in the last year and is currently trading at $0.30. (For more, see: Vantage Drilling a Ground Floor Opportunity.)
Gastar Exploration
There are three things you need to know about Gastar Exploration Inc. (GST).
The Bottom Line
The four companies listed above are likely to suffer in the near future due to reduced global demand and plunging oil prices. It’s possible that one of them (or more) don’t make it. The stocks of the companies that do will sell at incredible discounts prior to oil rising again. (For more, see: 3 Penny Stocks Worth Your Attention.)
Dan Moskowitz does not own shares in HK, SD, VTG or GST. He is currently long on FAZ, TECS, TWM, BIS and DRR.
Read more: http://www.investopedia.com/articles/investing/041015/4-oil-penny-stocks-watch.asp#ixzz3Wxk0UEg2
Follow us: @Investopedia on Twitter
By Dan Moskowitz | April 10, 2015
http://www.investopedia.com/articles/investing/041015/4-oil-penny-stocks-watch.asp?partner=YahooSA
Oil has suffered greatly over the past six months and you have likely read about oversupply being the key factor. Oversupply is a factor, but reduced global demand is the real culprit. Since we are now living in the early stages of a deflationary environment, oil prices are likely to decline further. To be fair, I’m currently shorting a few sectors of the market. I’d rather be bullish, but based on my research, prolonged record low interest rates has led to massive debt bubbles. Deleveraging will eventually need to occur, which will help fuel deflation.
The above points have been provided in order to warn you that this isn’t likely to be the best time to invest in any of the companies listed below. On the other hand, oil should bounce back several years from now. If a company on the list below survives through the worst of times, it will present a bargain-basement price where you could see parabolic gains down the road. But use caution and follow these companies carefully. They are penny stocks for a reason. (For more, see: The Lowdown on Penny Stocks.)
Halcón Resources
Halcón Resources Corporation (HK) is a drilling and exploration company that has consistently grown its top line on an annual basis and delivered a profit in fiscal year (FY) 2014. Total operating revenue last year was $1.1 billion versus $999.5 million in the prior year. In FY2014 average daily production jumped 26% year over year. The stock's 52-week range is $1.06 - $7.50 and current price (as of April 6, 2015) $1.85.
To understand the company’s potential, below is a quote from its latest Securities and Exchange Commission (SEC) filing:
“Our oil and natural gas assets consists of undeveloped acreage positions in unconventional liquid-rich basins/fields. We have acquired acreage and may acquire additional acreage in the Bakken/Three Forks formations in North Dakota and the Eagle Ford formations in East Texas, as well as several other areas.”
The problem is that Halcón relies heavily on commodity prices for production, and based on the points above, times are likely to get worse before they get better. That said, if the company can weather the storm, this would be a tremendous buying opportunity in the future. As a side note, insiders have been buying the stock in recent months. (For more, see: Are These Oil Stocks Heading to the Abyss?)
SandRidge Energy
SandRidge Energy Inc. (SD) was profitable in FY2014 but revenue suffered. It should also be noted that the stock has seen no consistent appreciation for many years. If that’s the case during a raging bull market, then odds are slim that this will take place if the market becomes more challenging. On a related note, Barclays recently set a $0.50 price target on the stock. SandRidge Energy plans on cutting its capital expenditure by at least 50% and significantly reducing its rig count this year. These moves aren’t likely to be enough to offset the reduced production, which might lead the company back to the red in FY2015.
Once again if SandRidge can weather the storm, it will present massive long-term potential. This is a time to watch the stock, not to buy it. Its 52-week range is $1.13 - $7.43 and current price $2.02. (For more, see: Is it Time to Give Up on SandRidge Energy?)
Vantage Drilling
Vantage Drilling Company (VTG) plans to buy back more of its debt in order to reduce the interest impact. This is after the company retired nearly $200 million in debt in FY2014. CEO Paul Bragg recently mentioned a vessel glut due to order cancelations which relates to failing oil prices. He also said that 2015 and 2016 would be difficult, but that when demand returns there would be a rig shortage.
Vantage Drilling has been profitable over the last four quarters, but a debt-to-equity ratio of 4.91 in this environment makes this an even higher risk play than the stocks mentioned above. VTG has ranged between $0.30 - $2.02 in the last year and is currently trading at $0.30. (For more, see: Vantage Drilling a Ground Floor Opportunity.)
Gastar Exploration
There are three things you need to know about Gastar Exploration Inc. (GST).
- Profitable in two of the last four quarters.
- No analysts in the past month rate underperform or sell (of 15).
- T. Boone Pickens purchased 200,000 shares.
The Bottom Line
The four companies listed above are likely to suffer in the near future due to reduced global demand and plunging oil prices. It’s possible that one of them (or more) don’t make it. The stocks of the companies that do will sell at incredible discounts prior to oil rising again. (For more, see: 3 Penny Stocks Worth Your Attention.)
Dan Moskowitz does not own shares in HK, SD, VTG or GST. He is currently long on FAZ, TECS, TWM, BIS and DRR.
Read more: http://www.investopedia.com/articles/investing/041015/4-oil-penny-stocks-watch.asp#ixzz3Wxk0UEg2
Follow us: @Investopedia on Twitter
