This $5 E&P Concern Bucks Today's Sell-Off And Is Heading Higher

Nov. 7.12 | About: Gran Tierra (GTE)

One of the few stocks to buck today's carnage, especially in the energy sector, was Gran Tierra Energy (NYSEMKT:GTE). This small $5 E&P concern posted results that delighted the Street and delivered solid production increases. The stock is still cheap and looks to be heading higher.

Here are key recent catalysts for Gran Tierra Energy:

  • The company announced quarterly production of just under 19,500 barrels of oil equivalent per day (BOE/D), a 6% increase from the same quarter in 2011.
  • Even better, the month of October showed average BOE/D of 20,000.
  • Revenue and other income for the quarter was a record $168.9 million, a 12% increase over the same quarter in 2011.
  • Funds flow from operations for the quarter was $89.9 million compared with $72.8 million for the same quarter in 2011.

Gran Tierra Energy is an independent energy company with oil and gas properties in Colombia, Argentina, Peru, and Brazil.

Here are four additional reasons why Gran Tierra Energy is solid growth play at just $5 a share:

  1. The median price target held by the 12 analysts who cover the stock is north of $7.50 a share, some 50% above its current price.
  2. The stock sells at just over nine times forward earnings, a discount to its five-year average (14.1).
  3. Consensus earnings estimates for both FY 2012 and FY 2013 had already risen over the past month. Earnings are expected to double from this fiscal year's projected 28 cents a share to a consensus $0.58 EPS in FY 2013.
  4. After flat sales growth this fiscal year, analysts see better than 30% revenue increases in FY 2013. Operating cash flow has grown around 80% over the past three years.

Disclosure: I am long GTE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.