Energy

5 Sizzling Energy Stocks Rated Buy That All Trade Under $10

Lee Jackson

Published: June 23, 2018 9:35 am

Last Updated: March 5, 2021 11:10 am

While most of Wall Street focuses on large and mega-cap stocks, which provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Many of the biggest public companies, especially the technology giants, trade in the low to mid hundreds, all the way up to over $1,000 per share. At those steep prices, it’s pretty hard to get any decent share count leverage.

Many investors, especially more aggressive traders, look at lower-priced stocks as a way to not only make some good money but to get a higher share count. That can really help the decision-making process, especially when you are onto a winner, as you can always sell half and keep half.

We screened our 24/7 Wall St. research database and found five energy stocks trading under the $10 level that could provide investors with some solid upside potential. While more suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential, and with the OPEC production increase issue out of the way, they all could be poised to trade higher.

Kosmos Energy

This stock was just raised to a Buy at Jefferies, and it is a solid energy exploration and production play. Kosmos Energy Ltd. (NYSE: KOS) is a conventional oil and gas exploration and production company focused on the Atlantic margin. The company focus is on unlocking new hydrocarbon systems and growing and maturing discovered basins through follow-on exploration success, development and production.

Although many companies in the industry have scaled back exploration, Kosmos believes this is the best route to generating value, seeking to replicate its discovery and development of the Jubilee field in Ghana.

Jefferies has a $9.50 price objective for the stock, while the Wall Street consensus target price was last seen at $8.78. The shares closed trading on Friday at $8.45.

Nabors Industries

This company provides drilling and rig services, and some feel it could be a takeover target. Nabors Industries Ltd (NYSE: NBR) owns and operates the largest land-based drilling rig fleet in the world, and it is a leading provider of offshore platform workover and drilling rigs in the United States and select international markets. Revenues in 2016 were $2.23 billion.

Nabors markets approximately 400 rigs for land-based drilling operations in the United States, Canada and approximately 20 other countries worldwide, as well as 41 rigs for offshore drilling operations in the United States and internationally.

The share price is down over 50% in the past year, which reflects investor focus on its balance sheet and ability to generate free cash flow and pay down debt. This concern has been exacerbated recently by a softer-than-expected earnings report and focus on 2018 non-cash deferred revenues. While most don’t see a quick fix for the company, the worst surely looks to be over.

Nabors investors are paid a 3.87% dividend, though that could be lowered going forward. The Jefferies price target for the shares is $10, and the posted consensus price objective is $9.76. Shares closed well below those levels Friday at $6.53.

Precision Drilling

Canada’s leading oilfield services firm provides contract drilling, well servicing and strategic support services to its customers. Precision Drilling Corp. (NYSE: PDS) provides customers with access to an extensive fleet of contract drilling rigs, directional drilling services, well service and snubbing rigs, coil tubing services, camps, rental equipment and water treatment units backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Despite the company’s large Canadian exposure, 54% of its U.S. drilling fleet is located in the Permian Basin, which remains the hottest shale area in the United States. This stock may be a top pick for aggressive accounts looking for low-priced stocks to gain more shares.

The $4.50 Jefferies price objective is about the same as the consensus price target of $4.44. The stock closed Friday at $3.27 per share.

Superior Energy Services

Superior Energy Services Inc. (NYSE: SPN) provides a range of services and products to the energy industry related to the exploration, development and production of oil and natural gas. The company’s segments include Drilling Products and Services, which rents and sells bottom hole assemblies, drill pipe, tubulars and specialized equipment for use with onshore and offshore oil and gas well drilling, production and workover activities.

The Onshore Completion and Workover Services unit provides pressure pumping services used to complete and stimulate production in new oil and gas wells, fluid handling services and well servicing rigs that provide a range of well completion and maintenance services.

Lastly, Production Services provides intervention services, such as coiled tubing, cased hole and mechanical wireline, hydraulic workover and snubbing, and remedial pumping services, and Technical Solutions, which provides services requiring specialized engineering, manufacturing or project planning.

SunTrust has placed a $13 price target on the stock. The consensus target is $12.89, and the shares closed on Friday at $9.92 apiece.

Weatherford

This company has been absolutely demolished from its 2014 highs, but may be offering aggressive investors big upside potential. Weatherford International Ltd. (NYSE: WFT) is one of the largest multinational oilfield service companies providing innovative solutions, technology and services to the oil and gas industry. The Company operates in over 100 countries and has a network of approximately 1,200 locations, including manufacturing, service, research and development, and training facilities and employs approximately 37,000 people.

The company offers customers a wide range of global capabilities, including a proprietary system for pressure management in the mushrooming arena of subsea production. The changes in government oil policy in recent years in Mexico may also provide some favorable tailwinds for the company despite the huge downturn in oil pricing.

The price target at RBC is $5, which compares with the posted consensus target of $4.40. The shares closed trading most recently at $3.33.

These are five energy stocks for aggressive accounts that look to get share count leverage on companies that have sizable upside potential and to add energy exposure. While not suited for all investors, these are not penny stocks with absolutely no track record or liquidity, and major Wall Street firms have research coverage.