In fact, Mytrah is experiencing a period of intense growth at the moment. Its revenue increased by 52% year-on-year. This helped to increase its earnings before interest, tax, depreciation and amortisation (EBITDA) by 56%, aided by an underlying EBITDA margin of 92%.

Underlying pre-tax profit was $2.49m and this leaves it with a cash balance of $32.2m. Alongside new banking facilities, it seems to have sufficient capital to develop its business and invest in new projects. On this topic, it has added a further 3.3MW to its portfolio, taking it to 917.2MW. This is ahead of target and has helped it stay on track to meet expectations for the full year.

Of course, renewable energy is becoming increasingly popular. This trend is set to continue in the long run and many investors may be wondering whether now is the right time to switch from oil and gas businesses such as BP and Cairn Energy and towards renewable specialists such as Mytrah.

Clearly, in the ultra-long term, renewables are likely to have a bright future due to stricter environmental regulations, lower pricing and incentives, as well as a more environmentally conscious business and consumer outlook. However, the lower price of oil means the switch from fossil fuels to renewables may be slower than expected as the financial incentive to switch is less attractive in the short-to-medium term.

Looking ahead, Mytrah is forecast to grow its pre-tax profit from £7.5m in the current year to as much as £20m next year. As such, its price-to-earnings (P/E) ratio of 18.1 appears to offer excellent value for money given its upbeat outlook. And with further growth on the horizon due to the renewable tailwind that’s likely to remain over the coming years, it appears to be a sound buy.

What’s the alternative?

However, that doesn’t mean oil and gas stocks such as BP and Cairn should be avoided. In the case of Cairn, it has a strong net cash position and an excellent asset base. It has also benefitted from a low oil price in terms of cost reductions, which should help to improve its near-term financial outlook. But with Cairn being lossmaking and forecast to remain so over the next two financial years, Mytrah has more growth potential and seems to have the superior risk/reward ratio.

Meanwhile, BP has a forward P/E ratio of 13.6 and offers much greater size, scale and diversity than Mytrah. This could count for a lot over the long run since changing regulations and incentives, as well as the uncertainty over how quickly the developing and developed world will adopt renewable technology, make it a relatively risky place to invest. Oil is likely to remain a key part of the energy mix over the coming years and now that BP is moving on from the Deepwater Horizon oil spill, its financial outlook is improving rapidly.

Therefore, BP seems to offer the most compelling risk/reward ratio, although for less risk-averse investors Mytrah offers superb capital gain potential.

The post Is this the best energy stock that money can buy after today’s results? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of BP. The Motley Fool UK has recommended BP. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Horizonte Minerals

Mining play Horizonte Minerals (LSE: HZM) failed to ignite the market in Friday following its latest results, and the company was last dealing flat on the day. The business, which focusses on nickel production in Brazil, announced that it had made “good progress” on its Araguaia project in the country during January-June.

The business completed an infill resource drilling programme to convert the initial 7-8 years of the mine’s life to the measured resource category, while it also received encouraging results from first stage testing of its Rotary Kiln Electric Furnace pilot plant. Still, a lack of revenues forced Horizonte to swallow a pre-tax loss of £1.16m, worsening from the £304,054 loss printed in the corresponding 2014 period.

And I believe too much uncertainty continues to swirl around the business to make it a viable stock selection. Not only is Horizonte still awaiting a preliminary licence for work at Araguaia, but a worsening supply/demand imbalance in the nickel market is casting doubts on the economic viability of the project should the necessary paperwork be received.

Mytrah Energy

Unlike Horizonte Minerals, I believe Mytrah Energy (LSE: MYT) could provide substantial gains for investors despite the release of a mixed report in Friday’s session. Although revenues ticked 10.7% higher during the first six months of 2015, to $32.59m, the business swung to an underlying pre-tax loss of $2.46m from a profit of $5.91m in the same 2014 period.

The company put this bottom-line deterioration down to higher depreciation and financing costs, while a slower start to the windy season in India also contributed to its performance in January-June. However, the company advised that “the power industry in India continues to develop favourably for Mytrah,” supported by the government’s rising focus towards renewable energy sources.

And the operator’s bubbly pipeline puts it in the box seat to enjoy strong returns in the coming years, in my opinion. Mytrah — which currently controls 543 MW of wind assets in India — has a further 200 MW worth of assets due to come online in time for next year’s storm season at its Vajrakarur, Viswa, and Viraj projects. With wind power demand in the country ticking steadily higher I expect revenues to explode in the years ahead.

Lamprell

I am not so bullish over the investment prospects of oil services provider Lamprell (LSE: LAM), however, owing to the worsening outlook of the world’s major fossil fuel producers. The company made headlines in Friday trade by announcing chief executive James Moffat would be standing down from next year, sending shares in the business 2.8% lower on the day.

The stock has seen its value tick lower again since July as Brent prices have resumed their familiar downtrend, while negative messages from the world’s major oil and gas producers has done nothing to shore up confidence in the sector — just yesterday Glencore slashed its capex target for this year to $6bn from $6.5bn-$6.8bn thanks to sagging black gold prices, while it also swallowed a $790m writedown on the value of its Caracal Energy division in Africa.

With demand for Lamprell’s rigs looking increasingly perilous, the City expects the firm to endure a 42% earnings decline in 2015, resulting in a P/E ratio of 12.9 times. Although by no means a poor reading, I reckon the firm could still be considered too expensive given that the poor newsflow emanating from the oil industry shows no signs of slowing, a situation that could drive the company’s shares still lower.

The post Are Horizonte Minerals Plc, Mytrah Energy Ltd And Lamprell Plc A ‘Buy’ Following Today’s News? 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.

Significant Opportunities

Of course, wind power is set to be a growth area both in the developed world and in emerging markets, with a greater focus on efficiency and a carbon neutral global economy set to lie ahead. As such, Mytrah Energy clearly has a product for which demand will grow and, as such, its long term prospects appear to be bright. That’s especially the case since its operating portfolio generates sufficient cash flow to support continued growth in its capacity each year.

However, there are a number of opportunities elsewhere – notably in the mining and oil sectors. Certainly, they may be less advanced in terms of their effects on the environment being relatively harmful, but with the prices of various commodities falling in recent months, the valuations of companies such as Dragon Oil (LSE: DGO) and Anglo American (LSE: AAL) offer tremendous appeal.

For example, Dragon Oil trades on a price to book (P/B) ratio of just 1.4 and this shows that, even if there are write downs to the company’s asset base over the medium term, its current valuation appears to take this into account. Meanwhile, Anglo American has a P/B ratio of just 0.7, which indicates that there is a tremendous margin of safety and that the company’s share price could head northwards at a rapid rate over the medium to long term.

Growth Potential

While there is clearly significant growth potential in wind power across India and the emerging world, Anglo American and Dragon Oil also offer superb growth prospects. For example, Dragon Oil is forecast to increase its earnings per share by a hugely impressive 42% next year. That’s around seven times the growth rate of the wider index and, despite this, it has a price to earnings (P/E) ratio of just 14.9 – less than the FTSE 100’s P/E ratio of 16.

And, it’s a similar story with Anglo American, with it being expected to increase its bottom line by 32% next year, with its rating of 13.4 having significant expansion potential.

Looking Ahead

So, while Mytrah has performed well and is well-positioned to successfully tap into the growing demand for wind power in India, there are fantastic opportunities elsewhere – notably with Dragon Oil and Anglo American. And, with both of those companies being bigger and arguably having more financial firepower, they could prove to be less risky than Mytrah Energy, while their low valuations and excellent growth prospects indicate that the reward on offer to their investors is very substantial. As such, Anglo American and Dragon Oil remain preferred choices to Mytrah Energy, although the latter is certainly one to watch.

The post Should You Buy Mytrah Energy Ltd Instead Of Anglo American plc And Dragon Oil plc? appeared first on The Twelfth Magpie.

More reading

• How much is needed in an ISA to unlock £1,220 of passive income a year?
• 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?

Peter Stephens 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.