Energy
3 Energy Stocks That Trade Under $10 and Have Big Upside Potential
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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 three energy stocks trading under the $10 level that have consensus Buy recommendations and 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 OPEC now looking to keep oil prices in a tight range, they all could be poised to trade higher.
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 10% 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 3.9% dividend, though that could be lowered going forward. The posted consensus price objective for the shares is $9.30. The stock closed well below those levels on Tuesday, at $6.16, which represents more than 50% upside potential.
Wall Street analysts are very positive on this small-cap energy play. Northern Oil and Gas Inc. (NYSE: NOG) is engaged in the acquisition, exploration, development and production of oil and natural gas properties, primarily in the Bakken and Three Forks formations within the Williston Basin in North Dakota and Montana.
The company holds working interests in over 2,630 gross (204.3 net) producing wells, including over 2,630 wells targeting the Bakken and Three Forks formations and over two wells targeting other formations. Northern Oil and Gas leases approximately 165,910 net acres, all located in the Williston Basin. The company engages in oil exploration and production through non-operated working interests in wells drilled and completed in spacing units that include its acreage.
The Wall Street consensus target price was last seen at $4.97, and the shares closed most recently at $3.40. So the potential upside is about 46%.
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.
Collectively, analysts have placed an $11.80 price target on the stock. The shares were last seen trading at $8.78 apiece, so the upside potential is more than 34%.
These are three 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.
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