However, it’s not the only resources company that could be worth buying right now. Another company with a low valuation may offer the potential for high returns in the long run.

Improving prospects

While Amerisur’s share price is down today, its news releases appear to be positive overall. It announced that it has made its first complete tanker loading from Esmeraldas on 22 March of 350,000 barrels of crude.

It also announced the rig mobilisation to, and spudding of, the Pintadillo-1 well. This is the first of up to three wells which will target the N Sand anomaly within the Platanillo block. There are four anomalies in total, with the well targeting estimated P50 resources of 11.44m barrels of oil.

Looking ahead, Amerisur is expected to deliver improving financial performance over the next couple of years. Despite this, it trades on a forward price-to-earnings (P/E) ratio of around 10, which suggests that it may be undervalued. That’s especially the case since it has significant exploration potential which could allow it to deliver improving levels of profitability over the medium term.

As such, while its share price may continue to be volatile in the near term, the company could be a strong performer over the coming years. An improving oil price may help to boost investor sentiment in the stock over the long term.

Margin of safety

Also offering a wide margin of safety in the resources industry is Vedanta (LSE: VED). It offers a diverse business model which could provide it with a lower risk profile than many of its industry peers. Certainly, its financial performance is highly dependent on the prices of a range of commodities. But with the outlook for the global economy being relatively upbeat, it could generate improving levels of profitability over the medium term.

In fact, Vedanta’s earnings are due to double in the current financial year. This puts it on a forward P/E ratio of around 6, which suggests that it offers a wide margin of safety. And with it yielding around 6% from a dividend that is expected to be covered 2.7 times by profit this year, the company appears to offer high total return potential.

Although investor sentiment may take time to improve after what has been a tough period for the commodities sector, solid financial performance could lead to higher valuations across the sector. Therefore, while not without risk, now could be the perfect time to buy Amerisur and Vedanta for their long-term growth prospects.

The post Amerisur plc isn’t the only top value share I’d buy after its 10% slump appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended Amerisur Resources. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, falling share prices can also present opportunities for investors to profit. They may offer a wider margin of safety than they previously did, and this can lead to high returns over a sustained period of time. Certainly, it can take time for those gains to be realised, but in the long run the idea of buying low and selling high can be highly effective. With that in mind, here are two underperforming stocks which could post successful turnarounds.

Improving outlook

Reporting on Thursday was oil and gas company Amerisur Resources (LSE: AMER). The South America-focused business reported encouraging results regarding Platanillo-25, which is a medium step out directional well that was recently drilled. The outcome of the drilling supports the view that there is significant further upside in the Platanillo field.

It was drilled to a total depth of 8,699ft and the company is now side-tracking Platanillo-25 in order to locate a production well further up-dip and nearer to Platanillo-21. There it expects to find better reservoir quality and additional pay thickness, which could mean more sustainable production. Once the side track is complete, Platanillo-27 will be drilled.

The company also reported that the long-term test (LTT) off Matiposa-1 is on track to start at the end of October. This could help to diversify the company’s production base, and will also add further material production to the company in the near term.

With progress being made on its strategy, Amerisur could become more popular among investors and this could help to push its share price higher. Clearly, it is dependent upon further news from its projects, but it appears to have growth potential in the long run due partly to its price-to-earnings (P/E) ratio being only 11.2.

Growth potential

Also offering growth potential in the long run is sector peer Ophir Energy (LSE: OPHR). The Asia and Africa-focused company is forecast to move back into the black in the next financial year, with a pre-tax profit of £22m being anticipated by the market. This could help to improve investor sentiment in the stock and may lead to an improved outlook for its share price following a fall of 13% during the last year.

Clearly, the company’s financial outlook is dependent on the oil price. In recent months, it has increased as supply cuts have started to rebalance demand and supply across the industry. Looking ahead, further rises could be possible due to the potential for further cuts and continued growth in demand. Therefore, now could be an opportune moment to buy a slice of Ophir Energy ahead of what may prove to be a stronger period for the wider oil and gas industry.

The post 2 small-cap growth stocks I’d buy and hold for 25 years appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Peter Stephens does not own shares in any company mentioned. The Motley Fool UK has recommended Amerisur Resources. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.