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Hot Penny Stocks – EGY

A.J. Watkinson April 17, 2014 Penny Stocks to Watch No Comments
Hot Penny Stocks – EGY

About a month ago, I covered a little-known independent energy stock called Vaalco Energy (EGY).   Since then, this has been one of the truly hot penny stocks  available to investors.  While the market has been correcting, this stock has been making new 52-week highs!

Just yesterday, an article I wrote on Seeking Alpha made their national syndication which can be found on Yahoo Finance as well as other news feeds.  Below you’ll find the contents of this article…

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Summary

  • Vaalco Energy blew away earnings last month, giving investors another option in the small-cap energy stock space.
  • Progress on the exploration front looks to be progressing nicely, which will add to potential profit down the line.
  • Great financial metrics make EGY a compelling argument to go long right now.

It seems lately energy stocks are getting more and more attention. Natural gas prices are rising, and the recent political turbulence in Russia is keeping crude oil prices elevated near $100 per barrel. And of all the penny stocks out there you can buy, we’ve found one in the energy sector that we need to keep an eye on…

Vaalco Energy (EGY)

Vaalco Energy is an independent energy company exploring, developing, and producing crude oil and natural gas. The company owns producing properties and conducts exploration activities in Gabon and Angola.

EGY is also exploring as a non-operator in the British North Sea and Equatorial Guinea, West Africa. Vaalco also acts as the operator of various resource properties in Montana, South Dakota, and North Texas.

And a couple of weeks back their stock jumped from $5.98 to $7.25… and it now trades over $8 a share!

So why the big move?

EGY announced earnings that blew away both estimates and last year’s earnings. Analysts were looking for net income of $0.34 per share, and the company delivered $0.46 per share for the three months ending December 2013. During fiscal 2013, Vaalco delivered a total of $0.74 per share of net income.

That’s in comparison to the $0.01 of net income in 2012.

And Steve Guidry, Vaalco Energy CEO, advised progress on wells is being made in both Equatorial Guinea and Angola… where the company hopes to have 4 exploration wells drilled by the end of 2015. That means investors can get in now, as energy prices continue to rise and EGY builds production output… which could drive the stock price much higher.

As for the remaining company metrics, EGY has plenty of reasons investors should be taking a closer look at picking up shares of the stock. Here are afew highlights-

  • Virtually no debt to speak of- which is outstanding for an independent oil and gas firm
  • A forward P/E of just 9.4x… making this stock cheap relative to its peers. The independent O&G industry has a 29.5x P/E.
  • Fiscal 2014 EPS projections of $1.14 per share
  • Institutional ownership of 82% of the stock- which is a huge percentage!
  • Just 6% of the shares are held short- meaning this stock isn’t on a short seller’s “A list”

While every investment has upside potential, there are still plenty of risks surrounding EGY.

Some of these risks include:

  • The company has trouble developing properties.
  • Actual production could be less than estimated reserves.
  • EGY could run into trouble with foreign governments, or potential domestic political instability could arise.

But even after weighing the risks, EGY still appears to be an excellent buy. Here’s why…

Given the success Vaalco has seen in the past developing properties, my confidence remains high that management will continue to execute their growth plan. They’re reporting consistent progress on current projects, which shows development progress and defined time tables.

And even though actual production might not meet estimated reserves, new production will certainly add to top line growth. In the end it’s just a matter of how much or how little investors see revenue increase.

Finally, Equatorial Guinea has become one of the safest countries for investors in West Central Africa. They’ve shed the perception of other countries in the region and have been working steadily as a global natural gas and oil supplier for more than 5 years.

What’s more, Angola has become a more politically stable country with both military and government leadership leading the way for the past three years.

If you’re comfortable with the risks EGY presents, then this stock might be worth adding to your portfolio. Should profitability and future development stay the course, EGY could turn out to be a great low-cost energy investment.

And that’s certainly makes for yet another hot penny stock

Keeping you one step ahead,

Signature

 

 

A.J. Watkinson

 

 

Summary
Article Name
Hot Penny Stocks – EGY
Author
Description
EGY has steadily been climbing over the past month- making new 52-week highs. This could easily become a $10+ energy stock…

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About The Author

A.J cut his teeth while working for more than 12 years on the corporate side of the financial services industry in the suburbs of New York City. In addition, A.J. has successfully traded stocks, options and currencies as an independent trader since the late 90's. Eventually A.J. moved out of the "rat race", landing in North Scottsdale, Arizona. During the past few years, he's worked as the editor of a number of high profile financial newsletters. In this role, he's run trading services for penny stocks, options, currencies, ETFs, and FOREX. While under his direction, each of these trading services had turned in positive performance... something very rare in the financial newsletter industry. In addition, he's been a regular contributor to a number of financial websites- writing under multiple pen names. A.J.'s current goal is to share his real world experiences and success (and failures) in the various financial markets to help others not only make money- but avoid losing it. It's this vision and passion that has led A.J. to launch pennystockreporting.com. Most of all, A.J. hopes to keep the little guy from getting caught up in the highly unscrupulous penny stock pump and dump scene.

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