Small cap energy stocks have been under pressure this quarter due to low natural gas prices and falling oil prices. Some of have gotten deep into oversold territory and offer long term investors good entry points at current prices. One such speculative play is Gran Tierra Energy (GTE)
6 reasons GTE provides good long term value at under $5 a share:
- The company has a robust balance sheet with approximately 20% of market capitalization in net cash on the books.
- Credit Suisse expects $1.60 per share in cash flow in FY2012. It also has an "outperform" rating and an $8 price target on the stock.
- The company more than doubled operating cash flow from FY2009 to FY2011 and now sells for less than 4 times current OCF.
- Analysts expect at least 20% growth in revenues for both FY2012 and FY2013 and the stock has a five year projected PEG of under 1 (.93).
- The stock is extremely cheap at just over 6 times forward earnings and is selling for just 14% over book value.
- The stock looks like it has solid technical support in the $4.50 level (see chart).
Disclosure: I am long GTE.