However, today its shares rose by as much as 15% in afternoon trading, after the Kurdistan-focused oil producer reported its full-year results. Although Genel’s losses deepened on falling production and a further write-down of reserves, the market responded positively to the momentum behind the development of its Miran and Bina Bawi gas fields in the Kurdish region of Iraq.

Full-year results

Following hefty impairment charges to its exploration assets, Genel’s operating loss last year widened to $1.22bn, up from $1.04bn in 2015. Revenue fell to $190.7m from $343.9m in 2015, missing its much reduced target of $200m–$230m for 2016, as Genel’s share of production fell sharply from 84,900 barrels of oil per day (bopd) in 2015, to 53,300 bopd.

Encouragingly, though, the resumption of regular payments from the Kurdistan regional government in return for oil exports helped Genel to return to positive free cash flow in 2016. The company reported free cash flow after capital expenditures of $59m, versus an outflow of $179m in 2015.

Turnaround plan

Genel has been dogged by a series of reserve downgrades and exploration failures over the past few years, but analysts still see promising prospects in the company’s gas business.

Global natural gas demand is rising due to the structural shift away from coal, and Genel is attractively positioned to benefit from Turkey’s plans to build a pipeline extension to import gas from the Kurdish region. There’s almost 1,500 million barrels of oil equivalent (MMboe) of 2C reserves in its Miran and Bina Bawi gas fields, and Genel is currently in talks with farm-out partners to help fund its development. Outside of Kurdistan, Genel also has exploration assets in Morocco and Somaliland.

However, whether Genel can actually deliver a successful turnaround is still very much up in the air. With net debt of $241m, the company does not have very much financial flexibility. Additionally, uncertainties over the production outlook for its current production assets continue to overhang the shares. As such, investors should approach Genel with caution.

Better play?

Of course, Genel is not the only stock in the energy sector with turnaround potential. Oil services company Petrofac (LSE: PFC) is set to see a significant improvement in free cash flow this year as it refocuses on its core Engineering & Construction business.

Its business model appears to be more stable than that of its sector peers and evidence of this can be seen from its strong backlog of orders and relatively stable revenues. Petrofac’s focus on the Middle East has also spared the company from recent savage cuts to capital spending in the oil & gas industry. What’s more, the scaling back its Integrated Energy Services (IES) operations will reduce its exposure to production risks and allow Petrofac to maintain a leaner capital structure.

The company recently won a $1.3bn contract to design and build a gathering centre in the Burgan oil field in Kuwait, which will give its order backlog a significant boost. And as Petrofac’s backlog already stood at $14.3bn before this latest deal, the company has excellent visibility over future revenues.

Valuations also seem attractive, with shares trading at a forward P/E of 10.0 and currently yielding 5.7%.

The post Is it finally time to buy Genel Energy plc? appeared first on The Twelfth Magpie.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Petrofac. 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.

Having failed to anticipate the fall in the oil price, Tullow is now in a difficult spot. Following a series of major oil discoveries, the company took on huge debts to develop the new fields. With net debt of $4.8bn and an uncomfortably high net gearing ratio of 5.1 times, these debts no longer look sustainable in today’s price environment, and Tullow is under huge pressure to shore up its balance sheet.

However, Tullow’s rights issue would reduce its net debt by less than a fifth, despite increasing its share count by more than half. This means the company’s ongoing deleveraging efforts will still be dependent on the company making further asset sales. And as the Brent oil price falls to its lowest level since November, Tullow faces major execution risks with its asset disposal programme.

But despite this, there are also a number of bullish catalysts on the horizon. The company has maintained its outstanding exploration track record, as it recently made an exciting discovery in Northern Kenya. It has found evidence of recoverable oil in the northern limit of the South Lokichar basin, and other discoveries in the area may be yet to come.

Moreover, Tullow’s capital expenditure budget is falling as the company nears completion of the initial phase of its TEN oil project off the coast of Ghana. Capital expenditure after its Uganda farm-down deal is expected to fall to around $350m this year, down from $0.9bn in 2016. And as production is expected to ramp up this year, the company is expected to generate growing free cash flows, which will no doubt help the company to pay down its debts.

Less risky

If you’re instead looking for a less risky investment in the sector, then Cairn Energy (LSE: CNE) could be a better pick. Cairn has undergone a major transformation in recent years as the company exited from India and repositioned itself as a full-cycle E&P company.

Unlike many in the sector, Cairn has net cash of $335m on its balance sheet and is fully funded for 2017. The company’s prospects are centred on developing oil fields in the North Sea and Senegal, where it has combined 2C reserves of more than 2.7bn barrels. Exploration around the Atlantic Margin are ongoing, and Cairn estimates further block wide exploration potential of around 500m barrels of gross mean risked resource.

Cairn is also on track to return to production this year, meaning it will soon be in a position to fund much of its ongoing exploration and development costs from organic cash flows.

Valuations may be a tad expensive though. It seems that Cairn’s share price implies oil will head towards $70 a barrel in the long run, which is significantly ahead of the Brent forward curve.

The post Why Tullow Oil plc is on my radar appeared first on The Twelfth Magpie.

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Jack Tang 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.

The payment represents part settlement of the pair’s $38.41m invoice for oil sales in June and will be shared between DNO and Genel. A further payment for the remaining balance is likely to follow in due course.

Genel’s share price has fallen by 73% over the last year, but the firm’s recent results suggest to me that the worst may now be over. The firm’s very low operating costs mean it was able to generate positive free cash flow of $6.2m during the first half of the year, even after interest payments of $26.9m were deducted.

Chief executive Murat Özgül said that more regular and predictable payments from the Kurdish authorities meant that Genel was able to make firmer commitments to spending. Mr Özgül said this is “already having an impact on production levels following the declines seen earlier in the year.”

Although Genel still has a $412.4m backlog of payments due from the KRG, this has fallen from $422.9m at the end of last year. If improving payments combine with a rising oil price and higher production, I believe Genel investors could see strong returns from current levels.

Are further gains likely after 277% rise?

Shares of Mediterranean oil and gas producer Sound Energy (LSE: SOU) bubbled nearly 10% higher this morning after the firm confirmed details of its Tendrara gas discovery in Morocco.

According to Sound, the TE-6 well encountered 28 metres of net gas pay. Under testing, it achieved a stimulated gas flow rate of 17m standard cubic feet (MMscf) per day. Sound describes this as “above initial expectations” and “highly commercial.”

Sound and partner Schlumberger now plan to drill two more wells to further appraise this discovery.

However, while Tendrara appears to be a promising asset, Sound Energy’s share price has already risen by 277% since the start of July. This has added about £240m to the firm’s market value. How does this compare to the potential value of Tendrara?

In a recent presentation, Sound estimated that its 27.5% interest in Tendrara could have a discounted net present value (NPV10) of €249m. That’s the total profit Sound would expect to make if the field was developed and put into production.

To reach that stage, pipeline infrastructure costing an estimated $50m would be required. One of Sound’s partners, OGIF, has expressed an interest in funding this, but I suspect this would come at a cost. OGIF might want a royalty stake in Tendrara, for example.

Sound recently issued €28.8m of bonds, but most of this cash will be used to repay existing loans. What’s more, these carry an effective interest rate of more than 11%, so interest payments will be a drain on the limited revenues from Sound’s Italian assets.

I suspect Sound will need to raise further cash if it’s to retain its large stake in Tendrara. On that basis I think the firm’s shares look very expensive. I’d take profits after recent gains.

The post Should you buy, sell or hold these small caps after recent updates? appeared first on The Twelfth Magpie.

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Roland Head 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.

Struggling bank?

Royal Bank of Scotland (LSE: RBS) had a tough time in the latest European banking stress tests, which suggested its capital buffer could almost halve in the event of a severe economic downturn. That’s likely to delay the bank’s resumption of dividends, which is already not expected before the end of 2017 (and then, only a 1% yield is forecast). The test only had a modest effect on the share price, which is down just 2.6% today at 184p — and it seems to have stabilised at around 25% down on its pre-referendum level.

Eyes will now be turned towards first-half results due on 5 August, and to any comments on the bank’s dividend plans and its full-year outlook. Analysts currently have a 60% drop in EPS pencilled-in for this year, but they’re expecting a 50% recovery next year — though the earnings consensus has deteriorated significantly in the last month.

RBS might surprise us, but I’m not expecting to see any good reason to buy the shares. We’re looking at a forward P/E of 17, dropping to a bit over 11 next year, and that doesn’t look like bargain territory to me.

Insurance bargain

Legal & General (LSE: LGEN) is a depressed share that I much prefer the look of after the insurance sector was sent plunging along with the banks in the wake of the Brexit decision. The shares plummeted after the vote, though the firm’s quick assurance that its planing was based on a 50-50 Brexit probability has helped secure a bit of a recovery — at 206p today, Legal & General shares are down 13% since the referendum.

We’re now looking at a forward P/E of 10 for this year, dropping to 9.6% for 2017 based on analysts’ forecasts — and those forecasts have remained upbeat in the past month. Dividend predictions suggest yields of 7% and 7.4% for the two years, with cover by earnings looking adequate at this stage — though if necessary, there’s room for a capital-preserving cut while still leaving yields at attractive levels.

First-half results should be with us on 9 August, when we should hopefully get some considered thoughts on the insurer’s likely post-Brexit position.

Oily troubles

On 18 August we’re due first-half results from Premier Oil (LSE: PMO), after July’s operations update told us that full-year production is expected to be “at or above the upper end of earlier guidance” of 65,000-70,000 barrels of oil equivalent per day. The integration of the firm’s acquired E.ON UK assets has completed, so some guidance as to the effect on the bottom line will be welcomed too.

But perhaps the most pressing issue is the state of Premier Oil’s finances, with net debt having stood at a pretty massive $2.24bn at the end of December 2015. The most recent update on the firm’s ongoing discussions with major lenders, on 1 August, told us that a further one-month delay in its financial covenant test has been agreed while debt arrangement discussions continue. It’s the second time in two months that the test has been delayed a month, presumably in the hope of getting a new debt package in place first.

A good investment? It’s risky, but I’m happy to hold.

The post 3 hot dates for your August investing diaries appeared first on The Twelfth Magpie.

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Alan Oscroft owns shares of Premier Oil. 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.

Oil still a bargain

Oil giant BP (LSE: BP) has seen its shares gain 17% since 23 June, to 452p, and they’re up 47% since their 2016 low point on 11 February. Part of the reason has been the recovering price of oil, of course, although Brent Crude has dipped back to $47 per barrel from over $50. But the latest spike is a direct result of the post-Brexit ‘flight to safety’, so are BP shares still worth buying at their higher valuation?

The long-term value of BP is entirely independent of whether the UK is a member of the EU or not, and so hasn’t really changed between 23 June and today. And I reckon the strong buy case for BP is unchanged by the recent price rise. Fundamentals don’t mean much this year, but forecasts for 2017 value BP shares at 15 times predicted earnings. Those forecasts have been strengthening over the past three months, with a pretty strong buy consensus on the shares now.

But the killer reason to buy, for me, is those tasty dividends that should yield over 6%. BP has repeatedly said it doesn’t want to cut its dividend, and with oil price prospects looking good over the next 18 months, I’d say it’s looking increasingly safe.

Miners too

The mining sector is the other obvious one that’s utterly indifferent to local politics of places like Europe, and it has also benefited from the rush to invest cash anywhere that doesn’t look risky. Shares in Glencore (LSE: GLEN) have gained 21% since the day of the vote, to 185p, and are up 161% since their lowest this year on 20 January.

It’s not all Brexit, as Glencore was already making firm progress in its recovery plan, disposing of assets to get its massive debt pile down to manageable levels. And with the outlook for worldwide demand and the price of commodities brightening, Glencore’s long-term future is looking safe.

The P/E multiple on Glencore shares is still a bit daunting, mind, at 47 based on this year’s expectations and dropping only as far as 33 on 2017 forecasts — and that’s without any meaningful dividends. A P/E to earnings growth ratio (PEG) of 0.7 based on 2017’s forecast 46% rise in EPS looks attractive, but that could well be a post-recovery one-off. A solid company, but I think I’d wait a while.

A bank, really?

Banking has been hard hit, with Lloyds Banking Group down 22% since the referendum and Barclays down 20%. But Asia-focused banks like Standard Chartered (LSE: STAN) have bucked that trend — its shares are up 4% since 23 June and 55% since 11 February.

With its top-level management team shaken up and serious steps being taken to turn its fortunes around, Standard Chartered could be an attractive long-term bet. While forecast pre-tax profits will still be well below those from recent years, after we’ve seen a decline from £6.85bn in 2012 to a £1.5bn loss last year, the £1.2bn profit pencilled-in for 2017 would drop the P/E down to under 16.

Whether the potentially lower risk makes Standard Chartered a better buy now than Lloyds or Barclays on forward P/E values of 8, that’s for you to decide.

The post Is it time to buy post-Brexit winners BP plc (+47%), Glencore plc (+161%) and Standard Chartered plc (+55%)? appeared first on The Twelfth Magpie.

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Alan Oscroft owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Barclays and 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.

The company has been receiving its agreed monthly payments, from the Kurdistan Regional Government in payment for oil supplied from its Shaikan development, of $15m gross per month. But there’s been not a penny yet to cover the arrears from before that deal was struck, when the government was taking the oil and not paying for it.

On top of that, Gulf’s debts and interest payments are building up while its cash reserves are dwindling — the company has been keeping afloat thanks to a standstill agreement with creditors that had been extended as far as 1 July.

But then, after the markets had closed on Friday, Gulf Keystone revealed the bad news — the standstill agreement has not been extended, the company doesn’t intend to make its delayed April 2016 coupon payments, and in the absence of the agreement the company will be in default. Gulf reiterated that it’s discussing a possible agreement with some stakeholders that could lead to a restructuring, and that the discussions will continue.

Is it all over?

What does this all mean? Gulf Keystone shares fell 30% in early trading when the markets opened Monday, but at the time of writing the price had recovered half of the drop to 4.1p for a 15% loss on the day. What does the future hold now for Gulf Keystone?

I’m reminded of the disaster that befell Afren last year, when, overtaken by debts it couldn’t service, a debt-for-equity restructuring that would have handed most of the company to its creditors looked to be the only way out. Despite a protest from some shareholders, the deal looked like it would be struck until the last minute, when the state of the company turned out worse than expected and Afren ended up in administration.

Gulf is clearly not in such a dire situation as its Shaikan reserves are large and the oil is pumping away at daily volumes of 40,000 barrels per day. But the company has said its wells might begin to exhibit natural declines later in 2016, and that more capital investment will be needed to maintain current volumes and to raise production to a possible 55,000 barrels per day.

Deal in the pipeline?

Now that the standstill agreement has been suspended, there has to be a possibility that a deal with lenders isn’t far from being inked — I reckon they’d be mad not to come to some sort of agreement given the genuine long-term potential of Shaikan. I see it as inevitable that Gulf will survive — its finances are all in the open and there shouldn’t be any Afren-like skeletons in the closet. The big question is how much of the company will be left for existing shareholder after any debt-for-equity swap takes place.

Considering that Gulf’s debt repayments are set to rocket next year, with $250m due in April 2017 and another $325m due in October, and with its market cap standing at only $40m today, I can’t see there being much left at all. I’ve been bearish on Gulf Keystone as an investment for a long time now, and I certainly wouldn’t be buying in the hope of recovery now.

The post Is it the end of the line for Gulf Keystone Petroleum Limited? appeared first on The Twelfth Magpie.

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Alan Oscroft 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.

Recovering oil prospects

On 7 July, we’ll have a trading and operational update from Premier Oil (LSE: PMO). The company’s previous update in May told us that full-year production was set to come in at the upper end of guidance after the completion of Premier’s acquisition of E.ON’s North Sea assets in April, and I don’t expect to see any significant change from that in July.

The big issue is Premier’s debt, which stood at $2.2bn at 31 December 2015, but by May the firm told us it still had undrawn bank facilities of around $750m and was talking to lenders about a potential covenant waiver should that be required. That’s going to be something to look for in the next update, and I’d hope lenders would be flexible now that oil is up around the $50 mark.

The Premier share price has dipped slightly since the Brexit vote, but not significantly in the long-term scheme of things. And at 72p it’s up 250% since January’s low.

Soapy update

On 26 July we’re due full-year results from PZ Cussons (LSE: PZC), the maker of Imperial Leather and a number of other cleaning and toiletry brands. For the year ended May 2016, the City’s analysts are expecting a 4% drop in EPS, though they have modest rises pencilled-in for the next two years. Dividend yields at around 2.5% aren’t high but are well-covered and progressive.

The trading update on 9 June told us to expect cash generation in line with expectations, with performance in all markets (UK, Europe, Asia and Africa) all expected to be satisfactory, though there should be an exceptional £17m charge relating to a liability in Nigeria.

My verdict? A safe investment, but with the shares on a P/E of more than 18 and with those low dividend yields, no great bargain and nothing to excite me.

Safety in dividends

My third pick is Centrica (LSE: CNA) whose first-half results should be with us on 28 July. The operator of the British Gas and Scottish Gas brands and a long-term stalwart of dividend investors saw its shares drop in the immediate aftermath of the EU referendum, but they’ve subsequently come right back.

There’s a 13% drop in EPS expected for the full year and I don’t expect interim figures to change that to any great degree — forecasts have dropped from where they were six months ago, but they’re stabilising. Back in April, an update from the company predicted full-year adjusted operating cash flow above £2bn, with overall capital expenditure of no more than £1bn. We should be looking for an update on that and it does suggest there’ll be ample cash to cover the forecast 5.7% dividend yield this year.

I see Centrica as a proven cash cow that income investors should seriously consider.

The post 3 dates for your July investing diary (Centrica plc, PZ Cussons plc and Premier Oil plc) appeared first on The Twelfth Magpie.

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Alan Oscroft owns shares of Premier Oil. The Motley Fool UK owns shares of PZ Cussons. The Motley Fool UK has recommended Centrica. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

But you know what? A fall that small is completely lost within its usual day-to-day volatility, and the UK’s top index hasn’t even given up the gain it made in the week leading up to the vote.

On top of that, some shares are soaring.

Here are three that could be among the year’s big winners:

Pharma boost

Speciality pharmaceuticals developer Indivior (LSE: INDV) enjoyed a boost in early June, when a patents case in the District Court of Delaware went in its favour and confirmed the validity of the firm’s Suboxone patent. On the day, Indivior shares climbed by 36%, and since this year’s low point on 9 February they’re up 71% to 224p.

The downside is that Indivior is expected to see earnings per share dropping both this year and next, which would put the shares on a P/E based on 2017 forecasts of 15.3 — which is only a little behind GlaxoSmithKline‘s multiple of 16.2 for the same year (with EPS growth and a 5.8% dividend on the cards).

In its first full year as a public company after demerger from parent Reckitt Benckiser, chief executive Shaun Thaxter told us “We significantly outperformed our financial plan for the year“. Indivior’s focus on opioid misuse coupled with its pipeline for developing “potentially transformational treatments for addiction” could well see it ending the year on a high.

Services recovering

Services firm Serco (LSE: SRP), which manages labs, education services, leisure centres and prisons, has not done well in recent years, with its shares losing 80% since their high point in July 2013. But we’ve had a 33% recovery since February’s low, to 102p.

Full year results in February provided a boost, with underlying trading profit coming in ahead of guidance at £96m, and although cashflow was negative, an outflow of £16m was better than expected. A rights issue during the year enabled the company to almost wipe out its debts with a reduction of £605m to just £78m, and Serco saw its pipeline of larger opportunities growing by £1.5bn to £6.5bn.

The shares are on a big forward P/E of over 50, but this looks like a company that is genuinely into recovery — an update in May said performance in the first four months of the year had been “stronger than we anticipated” and that profit for the year should be ahead of previous expectations.

Oily riches

Are smaller oil explorers finally coming to the fore? Indus Gas (LSE: INDI) has suffered badly though the oil price crash, with its shares down 80% since December 2012, but again we’ve been seeing a powerful comeback in 2016 — from a February low, the price has more than doubled to 215p. Strengthening oil prices have help for sure, although the price of a barrel has dipped below $50 again.

In September last year I found it hard to understand the low valuation of Indus Gas shares when they were trading at around half their current price, so I’m pleased with the movement since then. There hasn’t been a great deal of news, so I think the recovery has largely been due to a change in sentiment towards what are actually very thinly-traded shares.

If we see further oil price gains over the next 12 months and more, Indus’s resources in Rajasthan could look very attractive.

The post Will Indivior plc (+71%), Serco Group plc (+33%) & Indus Gas Limited (+105%) be among 2016’s big winners? appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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

Don’t miss the oil recovery

With a barrel of oil now back above $50, the highest it’s been in more than six months, time could be running out to buy up our big oil companies while they’re cheap.

From their low on 20 January, shares in Royal Dutch Shell (LSE: RDSB) have already regained 42% to today’s 1,791p, so is it already too late to pick up a bargain? No, Shell shares are still down 36% from the pre-slump peak in 2014, and forecasts are already being revised upwards, with two years of predicted EPS growth giving us a P/E of 13.6 by the end of 2017. The dividend is expected to be maintained at a yield of 7.6% too, and though it won’t be covered by earnings this year, it should be by 2017.

All of this is at today’s oil prices, and the next six-to-12 months should surely see significantly more progress on that front. I’d be surprised if a barrel isn’t fetching $75 by this time next year, possibly a lot sooner. It’s really no wonder the City has a Strong Buy consensus out on Shell shares, but they won’t be this cheap for ever.

Time for miners?

Prices of metals and minerals haven’t picked up so strongly — iron ore is up a bit, copper is still down. But anticipation is clearly building, and mining sector share prices are picking up. In fact, since 20 January, BHP Billiton (LSE: BLT) shares have climbed by 55%, to 876p, and that’s despite the costs the company is likely to face over its part in the Fundão tailings dam failure at its co-operated Samarco iron ore operation in Brazil.

An upbeat operational review in April, in which chief executive Andrew Mackenzie said the company’s recent structural moves will reduce output this year but should lead to stronger margins and returns longer term, has also helped. On fundamentals it’s hard to value BHP shares at this point, with forecasts suggesting a P/E of a hefty 32 for the year to June 2017. But we might just have seen the turnaround point.

Financial rebound

My third turnaround pick is the financial sector, and today I’m looking at RSA Insurance (LSE: RSA). Our banks and insurance firms still look undervalued to me, some seriously so, as sentiment following the financial crisis hasn’t yet recovered. And it’s probably still being damaged by fears of the devastation that could hit the sector should we foolishly leave the EU.

RSA shares have picked up by 31% since their recent low on 9 February, but I say we’re still a long way from being too late to pick up a bargain. In the two years since ex-RBS boss Stephen Hester took control, the company’s restructuring has been bearing fruit, leading to an upbeat Q1 update in May which reported operating profits as “strongly up“.

EPS growth forecasts for this year and next suggest P/E multiples of 14.8 dropping to 12, and a respectable 3.9% dividend yield by 2017. Are the shares cheap? They surely are.

The post Should you buy Royal Dutch Shell plc, BHP Billiton plc and RSA Insurance Group plc before it’s too late? appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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

Great time for small oilies?

The rising price of oil is making American oil shale and fracking operations look attractive again, and prices reaching the $50 per barrel level have helped push Pantheon Resources (LSE: PANR) shares upwards. Priced at 186p today, Pantheon shares have soared a stunning 680% in just 12 months!

The company, operating in East Texas, told us in its latest update that planned fracking is underway at its VOS#1 well and that drilling at its VOBM#2H well has commenced, together comprising the company’s fully-funded 2016 programme. That “fully funded” bit is crucial, and with the successful completion of a $30m share placing in March, Pantheon isn’t facing the liquidity pressure crippling some other small explorers. In fact, it’s forecast to generate profits in the year to June 2017, after a modest loss expected for this year.

As always, oil explorers like this are almost impossible to value at this stage. But with Pantheon shares on a P/E multiple of 37.5 for its first year of profit in 2017, if its wells are as productive as hoped and if the price of oil keeps on up, there could be more to come.

Banking on gold

Another commodity recovery, that of gold, is behind the 245% rise in Trans-Siberian Gold (LSE: TSG) shares over the past year. At approximately $1,240 per ounce, the shiny stuff is a long way up from its start-of-year low of around $1,050, and that’s geared up the Trans-Siberian share price to 38p.

Interest rates remaining low for longer than many had hoped have helped whet investors’ appetites for gold, and the likely economic turmoil that a UK EU exit (which would surely have adverse effects way beyond these shores) would cause will have sent many in the direction of safety.

The trouble is, even though Trans-Siberian shares are on low P/E valuations, the company’s cost of production has been variable. The cost of sales of $712 per ounce of gold recorded for the first half last year was 44% lower than the previous year, which is good, but such volatility can work both ways. If costs rise again and gold prices fall, profits could be squeezed.

Queuing for profits

My third is Accesso Technology (LSE: ACSO), a company designing and supplying virtual queuing systems for amusement parks and similar venues. Accesso, previously known as Lo-Q, has been a growth success over the past few years, with a 127% share price rise in 12 months adding to earlier rises to provide a 640% gain over five years.

The downside for me, though, is that the shares appear to be fully valued against future growth expectations. Accesso’s results announcement for 2015 includes details of continuing new contract wins, with Blackpool Pleasure Beach and the One World Observatory in New York among them.

But we’re looking at a P/E of 42.5 based on this year’s forecasts, dropping only to 35.2 for 2017, and PEG ratios in excess of the 0.7 or less that growth investors typically favour. It’s not one for me right now.

The post Can Pantheon Resources plc (+680%), Trans-Siberian Gold plc (+245%) and Accesso Technology Group plc (+127%) keep on soaring? appeared first on The Twelfth Magpie.

More reading

• 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?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Alan Oscroft 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.