Small-Cap Value Oil and Energy Stocks

I like researching and writing these articles. I always try to post here atleast once a month. I could probably post almost every day because I love analyzing and blogging but I doubt my girlfriend would like that. She would probably punch me.

The drop in oil prices has brought a lot of energy companies share prices down significantly. Key Energy Services (KEG) is a $313 million dollar well servicing company out of Houston, Texas. This small-cap has $443.8 million in net tangible asset value(tangible assets - total liabilities). So with a market cap of $313 million and tangible assets of $443 million it is selling for less than all the working capital and equipment it owns. This is even with the stock price up a whopping 17% today. In 2013 it had $64 million in free cash flow. As a small company the stock presents the possibility of significant growth in stock price as it recovers. The downside is earnings haven't been consistent over the years.

Energy XXI (EXXI) owns oil and natural gas wells and has a cool $1.42 billion in net tangible assets and a market cap of just $336 million. This is 76% below net tangible assets and 82% below book value. The company was profitable since 2012 but earnings are trending down.

The final oil stock is Parker Drilling (PKD) a $384 million dollar company with $492 million in net tangible assets. So we are still at a discount to net tangible assets. This one is not as cheap as the ones above, however, it boasts a lot more profitability. Earnings are more consistent. Infact it was profitable in the second and third quarter.

If oil prices are actually bottoming here as they appear to be doing small companies will have some nice appreciation. They come with more long-term risks of course versus their large cap counterparts. The ones above are basically penny stocks which is fine with me as they are traded on good exchanges and present some value and technical opportunity. I hope you enjoyed these oil and energy ideas on this value investing small cap stocks blog.

Biotech Stocks List

A lot of markets are at crucial areas here. The US major indices are probably going to decide which direction longer term they want to go. They could continue range bound for awhile longer though unless the Patriots get a hold of the air in the futures markets. They are at the top of the trading range here. You can especially see this in the Nasdaq. I was going through some scans and medical stocks kept showing up in large numbers. Biotech is one of the hot industries right now. So, I am putting up some of the best biotech charts I found. If the Biotech ETF IBB is not good enough for you these are some potential trade ideas. These are all momentum stocks in bull flags or breakout plays. This is purely from a technical analysis standpoint. SCMP that I put up a couple days ago was pretty cool because it was nice technically and with fundamentals. It's breaking out again up 6% yesterday. I don't know what is up with the value stock JVA technically. It has some crazy prints the past couple days. It looks like it could be going a lot lower now. Well, good for us value investors. As I'm typing this it is very early Tuesday morning the 27th. Let's get to the list.

First we have Dicerna Pharmaceuticals (DRNA) which has formed a triangle consolidation on light sell volume. Well formed triangles are one of the most reliable patterns. If it breaks out there should be a lot more on the long side but also if it breaks down from the triangle there will likely be more downside. Long bias on this one though but we shall see.

Next we have Athersys (ATHX) This one just broke out off of trend support. It did a hammer first on trend support and is running again.

We have ZIOPHARM Oncology, Inc. (ZIOP) next. This is a cool one because it gapped up, consolidated into a bull flag and is coming off the flag with a hammer.

Last is (Agenus AGEN) which is very similar to ZIOP. We have a gap up on very strong volume, a flag on light volume and we are testing the gap now.

Bottom Up and Top Down Stocks

I went through some scans I typically go through and thought I'd post some that caught my eye. The first one bottom up is Sucampo Pharmaceuticals SCMP.  The chart was cool because it just broke out of consolidation on very strong volume. It's also at a 5 year high. I looked at it some more and this is just under a $700 million dollar company with a diverse portfolio of pharmaceuticals it sells. The good thing I see here is the earnings revisions. Next quarters earnings estimate is $.11 up from $.05 90 days ago. The current years estimate is $.47 a share up from $.22 ninety days ago. Next years EPS is currently $.60 up from $.40 ninety days ago. It's always great when earnings are revised up. With the stock at $15.66 this gives us a forward P/E multiple of 26. With earnings growing about the same rate the stock is conservatively fairly valued. However, the next 5 years are expected to grow more giving the stock a mere .35 PEG multiple(price to earnings growth). Lots of bullish stuff going on here.


SCMR New high on volume

 

 I found this coffee company called Coffee Holding Company ticker JVA. It is a small company with a mere $34 million dollar market cap. Coffee companies are usually good businesses especially if you are selling beans wholesale, which they are. They are profitable and I see no reason the stock should trade around net tangible asset value. Roughly $20 million is net tangible asset value and the market cap is just above it at $34. It's around technical support and just had a wide ranging day up 7%.

that is technical and fundamental support

The top down one is oil. I think it is a good time to start scaling into crude oil long. Everybody knows the ETF USO. USO is a terrible way to invest in oil. It's because of the way it rolls the contracts. It has to turnover futures contracts thus resulting in a lot of decay. The futures themselves CL is ideally the best way to trade oil. There are better ETF's like 12 month Oil ETF USL . USL holds longer term contracts and thus more closely resembles the actual price of oil. I'm long some USL now. Full Disclosure: long USL

The Best Net Net Stocks?

I looked through a lot of net-net's lately and didn't find all that much. On Zacks.com I screened for ones with zero long term debt. That diminished the universe of them along with ignoring all Chinese ADR's. So far this company called The LGL Group ticker LGL founded in the year 1917 seemed the most intriguing. Mostly because the company and stock price has not always struggled. The stock preformed very well in 2010.The company has $9.9 million in net current asset value and a market cap of just $8 mil. $5.4 mil of the net current asset value is cash. The company is not profitable. The last year of profitability was 2011. I put it sort of in the category of Emerson Radio MSN a perennial net because they are both electronics companies. MSN by the way is now selling for less than half of its net current asset value and is profitable.

Net-Net PRLS Update and Metals Setup

I've been writing on Peerless PRLS here on the blog for years and in the last post on it I called it one of the most compelling net current asset stocks out there. They recently made an acquisition and now have a cash buyout offer for $7.00 a share. I talked on the phone with Peerless PRLS Chairman and CEO Timothy Brog five years ago. He's been very committed and patient in adding shareholder value with this company.

Metals are on trend support. I have a buy stop order in too long JNUG at 21.80.  Crude oil has a setup as well. There is a triangular consolidation on this flag/pennant over the last few days. If crude continues to crash I have a buy stop order at 74 in to short oil with the ultrashort ETF SCO.

 

Net Current Asset Stocks and Positon Updates

I plan on going through some net current asset stocks over the next few days as I will have some time off. I plan on using the trusty Graham Investor Site and a basic site like either MSN or Yahoo and just screening for great balance sheet strength with light total liabilities to find some stocks net cash and net current assets. I'll post up any interesting finds later this week. Off of the top of my head I had expected Delia's DLIA to be a successful net-net because of the strong brand and potential they had for a turnaround. I mean they are practically in every mall in America. I see this stock is now a sub penny stock trading below $.01 a share. Luckily I had forgotten about it for some time and never took a position.

The net-net Delcath Systems DCTH I posted on recently where I said I wanted to see it even cheaper to its net cash did indeed fall. When I say net cash that is essentially selling for less than the cash on its balance sheet minus all debt. The stock fell as low as $1.09 and has gone as high as $1.50s. I may have missed it as I didn't pull the trigger but this looks like a flag and it could very well drop even lower. I prefer to scale into positions so if I pick up shares around $1 they might just be half of the position.

My long term portfolio is mixed lately.  The Fidelity Emerging Asia Mutual Fund is underperforming the US Markets, however my dollar long position via the ETF UUP which I posted my buy of dollar ETF UUP on Twitter is finally coming around and breaking out again. My Pimco bond fund is  basically flat.

The major US indices look very healthy here and it looks like we are heading for new highs any day here. Even the Russell 2000 looks like it will break out here very soon. The Russell has been the laggard. It's often seen as a key index to the overall market. I may do a post soon on it as it looks like there is a failed signal on the chart forming. Failed signals can often be extremely important. Jack Schwager wrote about them in his books.

Deep Value Stock Blonder Tongue BDR

There is some activity in deep value asset land worth talking about. Blonder Tongue Laboratories (BDR) has always been a cheap value stock. It has never really delivered and seen the stock price follow through. Could this time be different? They just recently reported a strong quarter with actual sales growth and net income!! This has happened before as we can see from some of my old posts on BDR over the years. In 2010 the stock actually ran to almost $3.00 share. On this last quarter the buying volume in the stock is the highest I could find on any chart going back at least 10 years. The companies sales were up 23% and net income was $.06 per share vs. a ($.11) loss last year.  Margins improved too. Management said they expect the rest of the year to be improved as well.

Right now the stock is 29% below net tangible asset value of $1.74 per share. 

Since 2006 the stock has always found a floor around $1.00 a share. So it's pretty safe to say $1.00 is the current low side and about $3.00 the upside.  I made an 8% gain on my DGAZ trade shorting natural gas. I posted the setup on the blog and my entries and exits on my Twitter page.