|Written by GSCR Staff|
|Tuesday, 22 July 2014 07:08|
In Monday’s Goldman Guide we discussed that now may be the time to be a contrarian.
Oil may be one of those sectors that all of the so called experts on the street are overlooking and here is a company that looks primed to make big moves.
TGC Industries (NASDAQ – TGE - $4.77) offers an outstanding opportunity to get into oil and gas with lower valuation small cap prices. The Company is a ‘supplier’ to exploration and discovery firms offering geophysical services to companies in the United States and Canada. The Company conducts three-dimensional surveys; sells gravity data; and provides seismic data acquisition services primarily to onshore oil and natural gas exploration and development companies for use in the onshore drilling and production of oil and natural gas, as well as to potash mining industry.
Even though the stock has been nearly cut in half over the last year, there is still a relatively small amount of shorting going on, as the short float still is a small 6.3%. With a forward P/E at 10 and a 5-year PEG at 0.4, the consensus for growth estimates is strong. Analysts’ estimates are for an 18% CAGR in top line growth in 2014 and 2015 versus 2013.
The continued solid growth of the natural gas exploration industry combined with the steady environment for oil creates a strong reason to invest or trade in the sector. TGC Industries announces 2Q14 financial results on July 28th. Look for good news to serve as a catalyst for a solid rest of the year. We see TGE getting back up to the $6.25 level sometime in fourth quarter.
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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