It's been hard to find bargains in the energy sector but if you look hard enough you can find companies and segments of the energy sector that the market might be undervaluing. These well known and not so well known energy companies are trading very close to, or below their stated book values. In general, most of these names offer earnings growth potential and reasonable PE ratios. With markets getting more volatile, it makes sense to stay focused on companies that are trading at undervalued levels. If we see a market correction, these book value stock bargains could outperform. Here are the companies:
Hercules Offshore (NASDAQ:HERO) is trading around $6.13. Hercules is a offshore drilling company. These shares have traded in a range between $2.05 to $6.99 in the last 52 weeks. The 50 day moving average is $5.83 and the 200 day moving average is $3.60. HERO is estimated to lose about 53 cents per share in 2011. The book value is stated at $7.29.
Why HERO might be an attractive investment: Hercules has been posting losses for several quarters. However, the company now expects to see quicker issuance for drilling permits in the Gulf of Mexico and this should improve results. Hercules recently purchased 20 jackup rigs from Seahawk Drilling which could lead to higher revenues. The shares are extended past their 50 and 200 day moving averages, so I would wait for dips before considering a purchase here.
Denison Mines Corp. (NYSEMKT:DNN) is trading at $2.18 today. Denison is a uranium mining company, and is based in Canada. The 50 day moving average is $2.67 and the 200 day moving average is $2.58. These shares traded between $1.08 and $4.52 in the past 52 weeks. The book value is $2.20 per share so these shares are cheap based on that metric as well.
Why Denison might be an attractive investment: Denison has nearly $100 million in cash, you can see that and the book value data here. Denison is a well managed company with plenty of upside potential from these levels. At barely over $2 per share, the downside is limited and there should be strong support at the $2 level.
Vantage Drilling (NYSEMKT:VTG) shares are trading at $1.69. Vantage is an offshore drilling company. These shares have traded in a range between 99 cents to $2.26 in the last 52 weeks. The 50 day moving average is $1.89 and the 200 day moving average is $1.75. The book value is stated at $2.66
Why VTG shares might be an attractive investment: I like the company but I don't like the capital structure of VTG. According to Yahoo Finance, VTG carries a debt load of about $1.1 billion, which you can see here. VTG shares recently dropped to about $1.55 and around this price or below the shares could be an interesting but speculative investment. I had previously said VTG shares were probably too high and likely to fall in another article, which you can see here. Since the shares did fall, these shares became more attractive.
JA Solar (NASDAQ:JASO) shares are trading at $6.10. JA Solar is a leading manufacturer of solar products and is based in China. The 50 day moving average is $6.64 and the 200 day moving average is $7.23. Earnings estimates for JASO are about $1.25 per share in 2011 and $1.22 for 2012, so the PE ratio is only about 4. The book value is stated at $6.05.
Why JA Solar could be an attractive investment: These shares are dirt cheap from a book value and earnings per share perspective. JASO recently announced a deal with MEMC Electronics (WFR) which adds to future growth potential. Just days ago, China announced it has doubled their goal for solar power installations by 2015 and this is great news for China based firms like JA Solar. You can read more about this here. This article also notes that China is the world leader in clean energy investments.
Delta Petroleum (DPTR). These shares are trading at 77 cents and have a 52 week range of 67 cents and $1.47. The 50 day moving average is 91 cents and the 200 day moving average is 80 cents. These shares are trading below support levels. This company has too much debt in my opinion, but now that these shares have corrected, I would consider trading it only. The book value is stated at $1.80.
Why DPTR might be an attractive investment: The shares recently dropped below their 50 and 200 day moving averages so this might be a chance to buy shares cheap. This company continues to lose money and this is not what I would call an investment but rather a speculative trade.
Crimson Exploration (NASDAQ:CXPO) is trading around $3.40. Crimson is a independent oil and gas company based in Texas. These shares have traded in a range between $2.05 to $6.99 in the last 52 weeks. The 50 day moving average is $3.89 and the 200 day moving average is $3.51. CXPO is estimated to lose about 23 cents per share in 2011 and lose 10 cents in 2012. The book value is stated at $4.21.
Why CXPO might be an attractive investment: The shares recently dropped below their 50 and 200 day moving averages so this might be a chance to buy shares cheap. Oil prices have dropped in the past several days, but they still remain elevated and likely to generally trend higher in the coming years. The shares of CXPO dropped from about $4 down to current levels, in tandem with the drop in oil from about $112 to $100.
The data is sourced from Yahoo Finance. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.
Disclosure: I am long DNN, VTG. I may buy shares of JASO soon.