“Exploit This American Oil Giant for a Fast Double-Digit Gain!”

Quick solution to a Louis Navellier Emerging Growth teaser

By Travis Johnson, Stock Gumshoe, August 27, 2014

I’m officially on vacation, but had a lot of questions recently about Louis Navelier’s “next surge for my top oil stock is about to begin” stock, so I thought I’d throw out a quick answer for you.

The story is that this company is growing, with more growth to come, but has seen its stock price pull back recently to provide a “buying opportunity” — and he says it’s “Exploiting an oil field so big, companies are leaving the Middle East to drill here!”

So what’s the stock? I’ll give you a taste of the clues and then the answer, but you’re on your own for analyzing this one — making it quick today.

Here’s how he got my attention:

“After a meteoric rise of 89% this year, shares have pulled back 19%. And this is the exact kind of buying opportunity I’ve been waiting for to load up on more shares.

“This company loves to jump…

“In two days in May shares were up 14%. And the two-day jump in March was even better—18%!”

And the story is all about their production growth — here are our specific clues:

* “At the end of 2013, this company had boosted production 120%, year-over-year

* Production is expected to skyrocket another 135% in 2014

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* This company DOUBLED its oil fields in 2014

* 31 horizontal wells are now busily pumping profits giving them a substantial edge over their competition

* They just snatched up 1,527 NEW acres of oil fields, next to some of their richest producing wells

* More than 50 vertical wells are projected to be operational by the end of 2014, for a total of over 81 wells”

So who is it? Thinkolator sez this is: Callon Petroleum (CPE), which has indeed been a stellar performer this year (and we covered it early on, it was our best guess as the solution to a January Keith Kohl teaser). “Oil Giant” is an exaggeration, they’re a fairly small company with a market cap around $400 million, but it hits all the other clues precisely so I’m quite confident this is his pick and it has been an “A” rated stock by Navellier since April.

Callon is all about the Midland Basin, part of the Permian Basin that’s so hot these days, and they’re pushing for growth. It matches the clues, and it’s an interesting growth story as they add a rig and are focused on production growth, but other than that I haven’t looked in detail at the valuation or their prospects. Which, given my level of oil expertise (low), might actually be better for you — you can go work up your own opinion without my meddling.

If you want to get the story straight from the company, they had a brief and pretty illuminating presentation at a conference last week that you can webcast here, and there’s an analysis of the stock here that includes a fair amount of useful data as well.

So, I don’t know whether Navellier will be right in predicting that the stock will double by the end of the year, but you at least know the name and the ticker of this old but small and growing company so you can go forth, do your researchification, and come on back to share your thoughts with your fellow investors. You probably won’t hear from me again until after Labor Day, so enjoy the rest of your week!


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Foolster
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Foolster

This has been mentioned and recommended by several sources on Seeking Alpha. They suggest a sell price of $13.00 per share. There is the old saying about Bears Make Money, Bulls Make Money, Pigs Get Slaughtered. I am thinking I would be happy with 50 percent gain and sell at $14.99 per share.

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Solyom
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Solyom

Its financials are so so, its technicals poor, FV by DCL is about 8 bucks. For some reason beyond me its rated well by the Street. If the stock goes to 4 I might consider it.

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tfris
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tfris

Glad you had room to pack your thinkolator, enjoy your vacation.

Teda
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Teda

I bought CPE early this year and did fairly well when I sold it at $9.00 ($2.80/share profit). Somebody set me straight here — Yahoo Finance has CPE’s trailing P/E at 1,480 (!) and its forward P/E at a reasonable 11.64. Where did that 1,480 come from? Is it a misprint?

jeefu
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jeefu

CPE is correct, thanks to the vacationing Thinkolater for that. I always wonder, though, about newsletters touting companies exploiting the reported bonanza in U.S. recovery fields supposedly going to put the mid-east out of business. If the supplies are so enormously great in the Bakken and Permian, et al., fields, why does no one ever analyze what that supply will do to bring down the price and potentially impact-adversely- the profitability of all these exploiters who made their capital investments based on today’s oil prices? Anyone have a handle on that?

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sooku
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Well, you can sell the stock before that happens; it’s a slow process.

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Kevin Bolton
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Kevin Bolton

They don’t project based on today’s price, but on their own lifting cost of a barrel of oil.And then about 80% of today’s cost.

Sam
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Sam

On Yahoo the PE is 1474.
What does this indicate? Is it too expensive?

Quincy Adams
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Quincy Adams

The PE is essentially meaningless. You need to look at the cash flow excluding capital expenditures (available from the link Gumshoe provided) and the forward plan for capex. Anyone looking for a quick pop on CPE should have bought last September and sold this past June. Going forward, what’s more important for them and all the small drillers is how are they going to replace their reserves. Looking at CPE’s proven reserves and projected oil liftings 2015 forward, they have a half-life of about 3 years. I’m guessing they’ll be looking for a buyout from a hungry oil giant.

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Mark
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Mark

From what I have read Arab spring might be big this year ( I beleive is every December, might be wrong on that) However any local to America oil company might do well. I’ve read to many teasers to know what is true anymore, however A brent crude trade into december might just be crazy enough to work. I’m not doing that. If I had the money I would. I would need to do more reasearch if I had the money to invest in it.

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quartercrazi
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quartercrazi

All I know is that of the 4 recent recommendations from Navellier, all of them could have been bought 1 year ago for 1/6 to 1/5 of what they are selling for today. Where was his recommendation this time last year ?

Santa Fe Steve
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Santa Fe Steve

I am a little biased since I have owned Callon probably for fifty years. I owned it when it was private placement limited partnerships. I owned when Fred Callon was the CEO. The problem has always been that when they found something nothing went to shareholders but they always plowed it back into the company and usually good luck was followed by bad luck.
So I still own some of my shares but not inclined to buy more. They do seem to have acquired a good land position.

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