The price of oil reached a near-term peak earlier this year at over $100 per barrel. Just a few months ago, many investors were bidding up oil stocks and some were expecting the turmoil in Libya, and other oil rich countries to cause a huge price spike. Now oil is down to nearly $75 per barrel and a large number of oil stocks have been mercilessly sold to levels few believed possible. Many major oil company stocks are down 30% to 50% from their 52-week highs. Just look at shares in Marathon Oil (NYSE:MRO) or Weatherford (NYSE:WFT) to see the carnage. That leads us to the smaller oil stocks, which have been hit in many cases, even more. Some of the stocks below are trading more than 50% off the 52-week high, yet in many cases, these companies are in better shape financially than they were earlier this year. Part of this is due to capital raises that occurred at much higher prices, which strengthened the balance sheet, and some companies have made substantial new progress in drilling and exploration. A number of these companies have started to see insider buying as the share prices have fallen and that can often be a sign of a bottom.
Oil demand is only going to increase in the future and recessions don't last forever. This is the time for longer-term investors to be accumulating because it won't be long before we see another spike in oil prices. The companies below are all very high potential and could easily double or triple in the next year or so:
GMX Resources, Inc. (GMXR)
is a oil and gas company that holds interests in some high potential areas, including the Niobrara Formation and the Haynesville Formation. These shares have a 52-week range of $1.90 and $6.48. The 50-day moving average is $2.95, and the 200-day moving average is $4.25, so the stock is trading well below recent support levels. Book value is stated at $3.41. Analysts see a big jump in revenue next year. The revenue estimates
are seen jumping from around $129 million in 2011, and about $172 million in 2012. With this stock trading for about 70% off the 52-week high, it might be time to start buying for a rebound.
Stone Energy (NYSE:SGY)
is an oil and gas drilling company with projects in the Gulf of Mexico, Appalachia, and Texas. These shares have traded in a range of $14.21 to $35.94 in the last 52 weeks. The 50-day moving average is $24.54 and the 200-day moving average is $27.49. SGY is estimated to earn $3.58 per share in 2011, and $3.64 in 2012. This stock bottomed out around $10-$11 per share in 2010 back when the Obama Administration put a moratorium on new drilling in the Gulf of Mexico. If shares get that low in this market correction, I would buy heavily.
Crimson Exploration (NASDAQ:CXPO)
is a independent oil and gas company based in Texas. These shares have traded in a range of $2 to $4.73 in the last 52 weeks. The 50-day moving average is $3.22 and the 200-day moving average is $3.76. CXPO is estimated to lose about 14 cents per share in 2011 and earn 7 cents in 2012. The book value is stated at $3.83. A couple of directors have scooped up over 40,000 shares in the past few weeks.
Dejour Energy (DEJ)
is an independent oil and gas company with high potential projects in areas like the Gibson Gulch. Dejour has an excellent management team that made investors many times their original investment in a previous publicly traded oil company. Dejour CEO, Robert Hodgkinson founded Optima Petroleum, which later became Petroquest Energy (NYSE:PQ
) and now trades on the NYSE. Dejour has stepped up drilling and might post a profit next quarter. This company just received approval to commence development in the Gibson Gulch and could drill up to 8 wells there based on current plans. Zack's Investment Research has a buy rating
on the stock with a price target, which implies gains of nearly 400%.
Kodiak Oil and Gas Corp. (NYSE:KOG)
is an oil and gas drilling company. These shares have traded in a range of $2.43 to $7.70 in the last 52 weeks. The 50-day moving average is $6.12 and the 200-day moving average is $5.96. KOG is estimated to earn about 35 cents per share in 2011, and 83 cents in 2012. The earnings estimates are for 26 cents per share in 2011, but analysts see profits jumping to 78 cents per share for 2012. The CFO bought about 16,450 shares, which totals nearly $100,000.
Magnum Hunter Resources (MHR)
controls about 46,000 acres in the Marcellus Shale region as well as exposure to the Eagle Ford and Bakken. These shares have traded in a range of $3.75 to $8.66 in the last 52 weeks. The 50-day moving average is $4.79 and the 200-day moving average is $6.54. MHR is estimated to post a slight loss in 2011 and 18 cents in 2012. The CEO of one leading oil company says he thinks there are 20 BILLION
(with a B) barrels of oil in the Bakken. This stock is trading for nearly 70% off the 52-week high and could be poised for an oversold rebound soon.
The data is sourced from Yahoo Finance and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I am long MRO, DEJ, WFT. I may buy all of these stocks soon.
Disclaimer: Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.