Think Value, Think Oil

Written by GSCR Staff   
Tuesday, 15 April 2014 08:51

In yesterday’s Guide we had a great round table discussion on the market and what the next steps should be.  One of our recommendations was to look for value combined with a technical metric DMA price above the 20-day moving average.

 

Trading opportunities still remain for the right combination of value, price, and industry.  Vaalco Energy, Inc. (NYSE – EGY - $8.69) looks like a solid play based on these parameters.  The figure below illustrates the price has now moved above the 20-day moving average.  Additionally, the stock is very bullish all the way out to the 50-day DMA metric.

 

1-Year Chart for EGY (20-day Daily Moving Average in Red)

Source (Google Finance)

egy-20daysma-4-15-14

 

 

Vaalco Energy has exploration and producing sites in North America and Africa.  This earning potential forecast from these sites has the FY P/E under 10, a great sign.  EGY has also been under serious accumulation over the last three months as the stock has risen 30% on about 500,000 shares traded per day.

 

Oil and gas exploration stocks will remain a solid small cap trade even in the current market conditions.  Look for a 15-20% jump in price level for EGY by the end of 2Q.

 

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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