Energy

5 Sizzling Energy Stocks Trading Under $10 With Big Upside Potential

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While most of Wall Street focuses on large and mega cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Often 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 on to a winner, as you can always sell half and keep half.

Each and every week, we screen our 24/7 Wall St. research database looking for stocks with Buy equivalent rating at major firms and priced under the $10 level (the most recent picks included BlackBerry and Nokia), and this week was no exception. We found five energy stocks 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.

Antero Resources

This company with big potential for investors got tagged recently and is offering a nice entry point. Antero Resources Corp. (NYSE: AR) is engaged in the exploration, development and acquisition of natural gas, natural gas liquids and oil properties located in the Appalachian Basin. Other activities include water handling and treatment, and marketing of excess firm transportation capacity.

The company’s subsidiary, Antero Midstream Partners, is a master limited partnership that owns, operates and develops midstream energy infrastructure primarily to service its production and completion activity. Its natural gas gathering and compression assets support the exploration and development activities. The combination of the two makes this a solid pick for investors.

TD Securities has a Buy rating and a $7.50 price objective on the shares, while the Wall Street consensus price target is $8.45. The shares traded on Friday’s close at $3.53 apiece.

Gulfport Energy

This has been one of the favorites around Wall Street among the smaller and more nimble companies. Gulfport Energy Corp. (NASDAQ: GPOR) is an independent oil and natural gas exploration and production company with its principal producing properties located in the Utica Shale of eastern Ohio and along the Louisiana Gulf Coast.

The company reported second-quarter net income of $235 million, or $1.47 per share. Adjusted earnings results exceeded Wall Street expectations. The independent oil and gas company posted revenue of $459 million in the period as well, also topping Street forecasts.

Stifel has a $6.80 price target, though the consensus target is higher at $7.61. The shares closed trading at $3.28 on Friday.


HighPoint Resources

Investors looking for a small cap energy play will love this company. HighPoint Resources Corp. (NYSE: HPR) is an independent oil and gas company that engages in the exploration, development and production of oil, natural gas and natural gas liquids. The company primarily holds interests in the Denver Julesburg Basin in Colorado’s eastern plains and parts of southeastern Wyoming.HighPoint maintains a conservative approach to proved reserve bookings and only included approximately 220 gross proved undeveloped locations at year-end 2018, of which around 60 gross of those locations represent wells that are in various stages of drilling and completion activity. This amounts to approximately 1.5 years of future development activity at the current planned development pace.

The analysts at SunTrust are very positive on the shares, with a Buy rating and a $3 price target. The consensus target was last seen at $3.85, and shares recently most traded at $1.19.

Jagged Peak Energy

This smaller energy company had an initial public offering in early 2017 and currently has sizable upside potential from current trading levels. Jagged Peak Energy Inc. (NYSE: JAG) is a Permian Basin oil and gas producer with 70,000 net acres in the Southern Delaware Basin in three operating areas.

Its largest position is held in Whiskey River (35,000 net acres), which is located in Reeves and Ward counties, followed by Big Tex (22,000 net acres), which is located in Pecos County, and Cochise (12,900 net acres), which straddles Ward and Winkler counties.

A $10 price target accompanies Merrill Lynch’s Buy rating. The consensus target is $11.43, and the stock ended the week at $6.80.

Northern Oil and Gas

Stifel analysts remain 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. It is the largest non-operator in that basin.

With Bakken returns continuing to improve to well above 50%, and Northern’s operating partners representing what may be as the best operators in the basin, there is upside potential.

The company posted solid second-quarter results last week and also announced its chief executive officer was stepping down, a move that some on Wall Street welcome after some issues in the past.

Stifel has a monster $5.80 price target, which compares to the posted consensus target of $3.97. The shares were last seen at $1.70.

These energy stocks have delivered some decent earnings and still have been absolutely mauled as the energy sector has underperformed the S&P 500 drastically this year. While they are not suitable for all accounts, aggressive investors looking for energy plays could make some serious money. Note though that while markets have retreated somewhat from all-time highs, value stocks still come with some risks.

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