Think Value, Think Oil
|Written by GSCR Staff|
|Tuesday, 15 April 2014 07:51|
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)
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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