In the money

Money transfer and currency card specialist FairFX (LSE: FFX) has continued its heady ascent of recent weeks with a 3% gain in Friday trade, the business greeting the market with robust full-year numbers for 2015.

FairFX announced that revenues leapt 35.7% higher last year, to £7.4m, although heavy marketing spend drove the firm into a pre-tax loss of £3.4m. The money play added 103,338 retail customers last year, taking the total to more than half a million.

Reassuringly FairFX added that trading during the first quarter of 2016 had been in line with expectations, and I believe the firm’s huge investment in marketing and technology — not to mention strategic focus on the retail card market — should keep delivering the goods.

FairFX is not expected to flip into the black this year, however, given that its hot growth story is still in the early stages. But the money play is expected to report its first earnings of 1.1p per share in 2017, and despite a heady P/E rating of 30.1 times I reckon FairFX could prove a lucrative selection for long-term investors.

Oilie gushing higher

Oil explorer Circle Oil (LSE: COP) also enjoyed a firm bump skywards in end-of-week trade, an 18% advance putting FairFX firmly in the shade.

Investor appetite shot higher following news that Circle Oil had agreed to suspend repayments to the International Finance Corporation under its reserve based lending facility. The payment deadline has now been pushed back to May 13th.

The stunning rise of Brent crude to four-month highs above $44 per barrel has no doubt boosted investor hopes that Circle Oil may now be past the worst.

I am not so convinced, however, and believe Circle Oil could find itself on the back foot again should ‘black gold’ prices retrace and the oil play’s fragile balance sheet find itself under the microscope again.

In a hole?

Like Circle Oil, I reckon Sirius Minerals (LSE: SXX) is also at the mercy of a colossal share price correction, thanks to the hulking supply imbalances hanging over commodity markets.

The potash producer was recently dealing 2% higher from Tuesday’s close, however, Sirius Minerals settling in recent weeks following heavy stock price volatility.

Shares shot to their highest in almost a year in March following a definitive feasibility study at its North Yorkshire polyhalite project, an asset that Sirius Minerals believes will transform the business into “a world leader in the fertilizer industry.” But news that the firm will need $3.56bn to start digging brought shares back to Earth with a bang.

While Sirius Minerals throws up plenty of potential, the firm remains a high-risk stock despite the exceptional results of recent drilling work. The digger still has to raise finance for its asset in the North, while subdued potash values puts a further fly in the ointment. And of course the unpredictable nature of minerals production also makes the Sirius Minerals a gamble too far, in my opinion.

The post Should You Buy Sirius Minerals PLC, Fairfx Group PLC & Circle Oil Plc Today? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Indeed, only a year or so ago, Circle seemed to have a bright future with a market cap in excess of £100m and a cash-rich balance sheet. But the plunging price of oil and an expensive exploration programme have taken their toll on Circle’s balance sheet.

At the end of September, the company reported that during the first-half its net debt pile had ballooned to $64m, and sales had fallen 50% year-on-year.

Circle’s market cap has slumped to £16.6m at time of writing, or around $25m. So Circle’s net debt now exceeds the company’s market value by two-and-a-half times. As a result, it could be wise to avoid Circle for the time being. 

Continued sell-off

It’s also shaping up to be another bad day for Concha (LSE: CHA). Shares in the company have fallen 16% on the day at time of writing, adding to last week’s declines. Over the last three business days, Concha’s shares have lost 65% of their value, although there’s been little in the way of news to explain the decline. 

Concha’s shares slumped 52% last Thursday, which prompted the company’s management to issue a statement saying that the group was “not aware” of any press speculation that may have contributed to the recent volatility in its share price.

The company’s last market update was back in September when management revealed that the investment company was evaluating a “specific global opportunity within its investment scope.” Last week Concha’s management confirmed that “discussions are continuing” although “there can be no guarantee that this investment will be successfully completed.” It seems as if the market has taken this statement badly.

Unfortunately, there could be further declines to come as, Concha’s book value is only around 0.35p based on year-end 2014 figures. Unless the company makes a high profile investment soon, its shares could fall back to the 0.35p support level. 

Profit warning 

Shares in Audioboom (LSE: BOOM) are also under pressure today after the company reported its full-year results for the year to November. They fell significantly short of market expectations. What’s more, the company doesn’t expect to become cash flow positive until 2017 implying that two more years of uncertainty and fund raisings could be ahead for the group. 

According to today’s year-end trading update, Audioboom’s real revenue growth only began towards the end of its fourth quarter, with revenue in the period more than double the previous three quarters combined. And the company expects this trend to continue into Q1 of the next year. As a result, management expects the shift in timing and pace of adoption will hit its expected full year revenues for 2016. 

All in all, this was a pretty dismal trading update from Audioboom and it was, in many ways, a multi-year profit warning. 

The post Today’s Small-Cap Disasters: Concha PLC, Circle Oil plc And Audioboom Group PLC appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Look at Ophir Energy, (LSE: OPHR), for example. A broker downgrade at the start of the week possibly triggered the latest fall, with the share price now having lost 23% over the past five trading days, to 88p as I write — and over 12 months, Ophir stock has crashed by 58%.

The latest dip comes after first-half results released on 23 August, which looked reasonable. Ophir is not expected to deliver any profit this year, and in fact recorded a pre-tax loss of $123m in the half, but it’s expected to just exceed break-even in 2016. So, the question is whether the firm has the cash needed to get that far.

Looking safe

And the answer seems to be that it does, easily, with net cash of $392m on its books and CEO Nick Cooper saying that “Ophir continues to differentiate itself through the robustness of its financial position“. And if that’s not enough, the company was able to complete a $100m buyback of its own shares in the half.

Turning to the smaller oilies, we see the £35m Circle Oil (LSE: COP) in a similar position, with its share price heading further down recently, to bring in a 65% fall over the past 12 months to just 6.2p. Forecasts suggest that Circle will be close to break-even in 2016, so again we’re looking at a similar liquidity question.

At year-end in December (not reported until June), Circle told us of total revenues of $85m, down 9% due to falling oil prices, though the firm had available cash of $34.5m — although net debt was up to $59.2m by the end of May 2015. But with a four-year reserve-based debt facility having been agreed only in March 2014, which could provide up to $100m, and with Circle enjoying relatively low production costs in Egypt, I see no imminent danger.

I’ll finish with a look at Tullow Oil (LSE: TLW), which has seen its share price fall 10% in the past five days, and by a whopping 71% in 12 months — and an eye-watering 86% since February 2012! Tullow has had a couple of painful years, with earnings per share falling by three quarters in 2013, followed by a bone-jarring $2bn pre-tax loss in 2014.

Set for a nice recovery?

But the firm’s restructuring and cost-saving was bearing fruit by the mid-way point this year, and though Tullow was facing net debt of $3.6bn, it still had a cash and debt headroom position of $2.3bn. And in an operational update last week, CEO Aidan Heavey told us that Tullow “continues to make good progress […] with continued emphasis on managing costs, capital expenditure and the balance sheet“.

There’s a small profit on the cards for Tullow this year, but a significant rise forecast for 2016 would being the P/E down to about 16 — and a continued recovery could make Tullow a good investment for the stout-hearted.

The post Why Are Ophir Energy Plc, Circle Oil Plc And Tullow Oil plc In A Slump This Week? appeared first on The Twelfth Magpie.

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• How investing in a Cash ISA could cost you a comfortable retirement
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Tullow Oil. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Confidence Builds Up At Ultra

Ultra stock is flat over the last 12 months, and has been looking for direction since the end of 2010 — but is the tide turning?

Not only has Ultra recorded a strong performance since 9 April (+11%) but its latest acquisition, announced on Monday, reinforces the view that this A&D firm could be on the right path of value creation.

It’s spending $265m in cash to bulk up its electronic warfare offering by acquiring the electronic products business of US-based Kratos: deal-making has been core to its strategy ever since inception, and is unlikely to play a minor role in its capital allocation strategy in the next few quarters. 

Ultra has a solid balance sheet, and it loos like its stock offers upside based on fundamentals and trading multiples, although Ultra may appear to be more of a dividend play (forward yield 2.4%) than a growth play at present.  

Xtract Is On A Roll 

Xtract has been on its way up for a few weeks now, so the obvious question is whether it’s all gold that glitters for this miner!

I remain moderately bullish on this casino stock, which is up 5% today, and has recorded a +37% performance since mid-May, when it emerged that it had found a significant “concentration of gold on the intersection of two major geological structures at the Salvadori prospect at the Chepica Gold and Copper Mine in Chile.“

It announced today the main characteristics of the ore zone (“approximately 8,000oz of gold is available,” it said), which made for an encouraging reading. 

As I pointed out in mid-May, its rally may well continue (the stock is up 227% this year), and that could be backed by willing shareholders and new discoveries. It remains a risky bet, of course, but one that my be worth taking at 0.45p a share as part of a diversified portfolio. 

Circle Oil: Short-Term Pain For Long-Term Gain? 

Circle Oil was hammered on Monday: I didn’t expect that, but it was never meant to be an easy ride for its shareholders, as I recently pointed out.

Still, there are reasons to be optimistic, and its awful trading update on Monday may not be such bad news after all.

Impairment and write-offs of assets in Egypt and Oman were to blame for its annual pre-tax losses. Falling oil prices were behind these non-cash losses, but as Circle Oil cleans up its balance sheet, the biggest risk remains its commitment to capital expenditures. 

The oil industry backdrop “combined with the cost overruns on both the Mahdia Block and on Block 49 in Oman, have resulted in Circle undertaking a thorough review of its cost base and capital expenditure commitments,” the group said yesterday, adding that “in the current cash constrained environment, the board will continue to evaluate its commitments in Tunisia.”

Its new boss, Mitchell Robert Flegg — whose appointment was announced on Friday — has lots of work to do, not least because at the end of the year available cash totalled $34.5m (2013: $26.1m), while net debt stood at $38.69m.

At the end of May, net debt had increased to $59.1m, which implies a manageable forward net leverage above 2x.

The post Should You Buy Or Sell Ultra Electronics Holdings plc, Xtract Resources PLC & Circle Oil Plc Right Now? appeared first on The Twelfth Magpie.

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Alessandro Pasetti has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Circle Oil

First off, I would never invest a penny in these kind of shares unless my portfolio was properly diversified. Also worth bearing in mind is that I rarely argue in favour of smaller oil companies these days, as most of them are not suitable for value investors, given that their risk profiles are hard to model.

Circle Oil bears the hallmarks of a value proposition, however. 

To start with, it boasts a strong track record with regard to revenues and earnings generation, while its cash flow from operation is one element I like. The shares have halved in value since September, when they traded around 27p, and you’d have recorded a 60% loss on your invested capital if you had invested in it five years ago. 

However, recent news from Morocco — where well flows were 140,000 cubic metres per day, and production is expected to start at the end of next month — combine with trading multiples that point to a hard bargain: forward multiples for net earnings and adjusted operating cash flow stand at 7x and 3x, respectively. 

This is also a bet on political stability in Egypt and Morocco — did you notice the “Emaar Misr IPO seen as sign of Egyptian resurgence” headline in The Financial Times last week? 

GKP & SOCO

Soco is not an oil company that strikes me as being at the forefront of competition. Time and again over the last decade, SOCO management has often bragged its potential, talking of terrific upside for shareholders based on its net asset value… but its shares still trade in line with its level they recorded in September 2005. The dividend doesn’t look safe, and SOCO has fallen out of favour with a few brokers this month, too (Goldman Sachs price target 151p; JP Morgan price target 168p).

The problem is that SOCO has been a promising investment for a long time, but in recent months it has proved to be more cyclical than many pundits and analysts had expected. With forward trading multiples for net earnings and adjusted operating cash flow at 22x and 7x, respectively, SOCO remains a strong sell in my view. I don’t know if this is the bottom for its earnings cycle, but if you are invested, you’d do well to close the trade right now at 188p a share, I’d argue. 

That said, I prefer SOCO to GKP. Dilution risk points to plenty of downside for GKP shareholders, and it could be argued that GKP may need to raise about $50m of new equity by the end of the third quarter, based on its cash flow statement, working capital management and heavy investment requirements.

Its relative valuation, at 12x its forward adjusted operating cash flow, signals risk. At 35p a share, GKP has lost almost 50% of value this year, and is down 76% over the last two years. If you wonder whether you should bet on it, consider that there’s better value elsewhere…

The post Should Circle Oil Plc Replace Soco International Plc & Gulf Keystone Petroleum Limited In Your Portfolio? appeared first on The Twelfth Magpie.

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• 4 steps to building a £38,456 retirement income with ISA shares
• How investing in a Cash ISA could cost you a comfortable retirement
• How much could Barclays shares pay in dividends by 2028?

Alessandro Pasetti has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Hardy

Shares in Hardy Oil & Gas (LSE: HDY) have slumped 88% over the past five years, to 27p, showing just how risky investment in the oil exploration business can be — especially when it comes to companies not yet in profit.

At the halfway stage back in November, Hardy, which operates in India, told us that it had no debt and had cash and short-term investments amounting to $22.9m — and assured us that it was “well funded to meet its future work commitments“. But since then we’ve heard nothing about financing, with full-year results not due until June, so we really have no idea of Hardy’s cash situation right now.

The firm has also relinquished one of its exploration licences in India, which will lead to the writedown of $22m in intangible assets this year. Hardy doesn’t look in immediate danger of collapse, but 2015 could turn out to be a critical year.

Circle

Circle Oil (LSE: COP), focused on the Middle East and Africa, has seen its shares drop 73% over five years to just 10p, and that includes a 64% fall just since last September. Circle is at least profitable, though we have a big fall in earnings expected for the year just ended in December followed by a more severe fall in 2015.

The most recent financial update we’ve had, in February, told us that Circle was still funding its operations from its own operational cashlow and had $34m of available cash. On the debt side it had drawn $45m from one loan facility, and had a further $30m convertible loan due for redemption in July 2015 — although the terms of that loan have since been renegotiated.

Recent operational updates have been disappointing, with the company’s Shisr-1 well in Oman and its KAB-1bis well in Morocco both being plugged and abandoned. Still, Circle does look safe, and should benefit nicely from an uptick in the oil price if and when it comes.

Enquest

Enquest (LSE: ENQ) has suffered the biggest one-year fall, of 72% to 39p, as profits are set to plummet all the way to a forecast loss in 2016. In fact, in 2014 results just released this week, Enquest reported a basic loss per share and told us its net debt had ballooned to $933m (from $381m a year previously) — and that comes from a year of rising production, so low oil is hurting Enquest badly.

The firm is engaged in hedging and is cutting its capital expenditure, and has “successfully negotiated a relaxation of covenants to its revolving credit facility“, but says that “continued compliance with […] covenants is a priority“.

Brent crude has slipped back to around $55 a barrel, which is really not what any of these three want — but it looks likely to hurt Enquest more in the short term. Would I invest in any of these? No, I wouldn’t myself — they’re really for experts with steely nerves.

The post Is There Any Way Back For Struggling Hardy Oil & Gas plc, Circle Oil Plc And Enquest Plc? appeared first on The Twelfth Magpie.

More reading

• See what £10,000 invested in dismal Diageo shares just 1 week ago is worth today
• Up 1,146%! 7 things I’ve learned from the stunning Rolls-Royce share price comeback 
• 4 steps to building a £38,456 retirement income with ISA shares
• How investing in a Cash ISA could cost you a comfortable retirement
• How much could Barclays shares pay in dividends by 2028?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended shares in Afren. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Given these concerns, today I am looking at three oil explorers whose ultra-low price could arguably have already factored in the impact of a worsening market imbalance and consequently could deliver plenty of shareholder upside.

Premier Oil

Chairman of the independent explorers’ association Brindex, and a director at Premier Oil (LSE: PMO), Robin Allan, sounded the klaxon again this week by warning that “it’s almost impossible to make money” in the North Sea with prices camped around or below $60 per barrel.

The business has seen production explode recently as its assets in Vietnam and Indonesia have ramped up output, and volumes surged 12.6% during January-October to 64,000 barrels of oil equivalent per day. But with low prices endangering its operations in the British Isles, and Premier Oil warning that new projects will only be sanctioned at its long-term oil price target of $85, the firm’s growth prospects could come under pressure.

Still, Premier Oil is expected to see earnings gallop 40% higher in 2014, in turn creating a P/E multiple of just 4.4 times prospective earnings, which is comfortably below the bargain watermark of 10 times. Although the business is expected to see the bottom line droop 36% next year, Premier Oil still carries a tiny P/E reading of 6.6 times.

And the oil play’s terrific ‘paper’ price is underlined by a price to earnings to growth (PEG) readout of 0.1 for this year, some way under the value marker of 1.

Enquest

Exploration play Enquest (LSE: ENQ) — which specialises in rejuvenating and extending the life of oil fields — has seen sentiment dip in recent months as development of its Alma/Galia project in the North Sea has been subject to significant delays. On top of this, a backcloth of rising costs has exacerbated concerns over the firm’s profits prospects.

Consequently, earnings at Enquest are expected to remain under pressure in the near-term, and the business is expected to see the bottom line slump 57% in the 2014. Still, this projection leaves the business dealing on a P/E multiple of just 5 times. But investors should be aware that a further 40% decline in 2015 pushes this to a far-less-appealing 13.2 times.

Like Premier Oil, Enquest’s exploration strategy in the North Sea could come get hammered should oil prices continue to lag. But in the long term, the company’s international expansion could still deliver surging revenue growth, particularly once its projects in Tunisia and Malaysia heat up.

Circle Oil

Irish oil specialist Circle Oil (LSE: COP) boasts a raft of top-notch assets across North Africa and more specifically in Tunisia and Egypt. And the company’s recent expansion into Morocco represents a wise strategic play due to the government’s oil-friendly fiscal incentives as well as a strong local demand base.

The business has got off to a promising start in the country, with Circle Oil striking first gas back in June and announcing a second successful discovery at its Sebou permit in October. Another four wells are due to be drilled in the area and the company is priming its assets for future production.

As a result of an expected 22% earnings dip, Circle Oil currently changes hands on a P/E multiple of just 5.5 times earnings for 2014. And this slips to just 4.4 times for next year owing to an estimated 3% bottom line bounceback.

The post Are These Oilies Worth A Punt At Current Prices? Premier Oil PLC, Enquest Plc And Circle Oil Plc appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.