Royale Energy: Experts in Natural Gas - Not Marketing

Laura Cadden had it right with Royale Energy (ROYL).  In her article on June 6th, she correctly chose Royale Energy as her top pick for 2008.

Yesterday, Royale Energy issued a press release announcing "a return to profitability."  I used to think that marketing was overrated.   After yesterday's announcement by Royale, I realize that it's not only important what you say, but how you say it.  

Royale delivered on its June 30 PR promise of delivering profit in Q2 - its first in some time.  It did so in sizzling fashion - beating estimates.  Yet they chose a low key mid-day announcement that barely got noticed.

Royale has demonstrated expertise in the Natural Gas field; however, it clearly does not know how to market its success.  This is a reminder that small companies often have very narrow areas of expertise and often fail to capitalize on market opportunities. The market will probably take more notice, as ROYL is now on the Russell 2000, and several other experts have been bullish on the stock. Management should take every opportunity to ensure the market recognizes the value of their company.  

At the end of trading, ROYL closed up 14 cents or 2.18%.  A more aggressive, better timed announcement would have sent a message to everyone and it is likely the stock's price per share would have closed much higher. More importantly, it would have accelerated trading volume for the remainder of the week.

Small companies need to start thinking bigger when it comes to selling success. Royale's announcement is a true success story that warranted much better PR - along with better timing. 

Disclosure: Author holds a long position in ROYL

Comments

[algore:]

I'm long Royale too and was pleased by the understated nature of the release. I would rather management focus on company performance. The market will place it's own value on the stock. Better to undersell and over deliver. Better yet to earn a reputation for it. Assuming you've got the goods. If not then yes, you need .com type hype and investors need to cash out before the flame out. It looks like Royale has the goods "in the can" so they can take the former approach. Of course they've been in business a long time and it seems to be their nature. I like it.

Good investing to you.

2008 Jul 30 07:29 AM

[J. Christop...:]

I hear ya Michael -- that announcement reminded me of many Chinese companies' marketing attempts -- very subtle... maybe too subtle. Though as algore said, it could be an indication of a strong focus on performance. I'm still bullish on ROYL. Look forward to reading more of your articles on SeekingAlpha! Laura

2008 Jul 30 10:31 AM

[rhj123:]

Good article on a small company that many of us can afford and follow. We need more of these articles. Great!

2008 Jul 30 02:40 PM

[User 234834:]

Laura,

I submitted another article tonight on ROYL. I have considerable investing experience; however, most of that was 10-15 years ago. I have been watching ROYL on LVL2 on a daily basis and simply can't believe how corrupt our market has become. I am watching MMs systematically drive a company's stock price. My understanding is that any trading done to influence a stock's price (up or down).

ROYL is at the top of the Naked Short List. Short and Long trading are fundamental to our market; however, something has gone terribly wrong - particularly on small cap stocks. Back in the day, a company that improved performance to the level ROYL did in Q2 would have seen a pop in the PPS.

The playing field is imbalanced, that individual investors need to carefully consider whether they should trade in small caps at all. The same exact thing is happening with SATC and QTWW - two stocks I did well on. It seems LONG trading is almost gone, and now investors are better off selling short or swing trading.


On Jul 30 10:31 AM Laura Cadden wrote:

> I hear ya Michael -- that announcement reminded me of many Chinese
> companies' marketing attempts -- very subtle... maybe too subtle.
> Though as algore said, it could be an indication of a strong focus
> on performance. I'm still bullish on ROYL. Look forward to reading
> more of your articles on SeekingAlpha! Laura

2008 Jul 31 11:41 PM

[FutureBoy:]

I didn't know that there were ROYL longs. It's good to know. It's seemed to me that virtually everyone making money off of ROYL was part of a pump and dump system and anyone holding long simply was losing money, like myself. Do you actually think this stock will go up passed 12 again this year? Per your post, I think you are right–even a tiny company like ROYL should show some savvy about boosting their image and value for the investor. I would bring your blog to their attention. I've not seen anything positive written about ROYL on any forum or blog. Thanks for your post, it's given me a new perspective.

2008 Aug 01 06:20 PM