While most of Wall Street focuses on large and mega cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Many of the biggest public companies, especially the technology giants, trade in the low-to-mid hundreds, all the way up to over $1,000 per share. At those steep prices, it’s pretty hard to get any decent share count leverage.
Many investors, especially more aggressive traders, look at lower-priced stocks as a way to not only make some good money but to get a higher share count. That can really help the decision-making process, especially when you are on to a winner, as you can always sell half and keep half.
With the sharp rise in the price of oil, and with most stocks lagging the big move, it makes sense to add weighting to the sector now. We screened Stifel’s energy research universe and found the following five stocks trading under the $10 level that could provide investors with some solid upside potential. While much better suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential and energy exposure.
This company with big potential for investors got tagged recently and is offering a nice entry point. Antero Resources Corp. (NYSE: AR) is engaged in the exploration, development and acquisition of natural gas, natural gas liquids (NGLs) and oil properties located in the Appalachian Basin. Other activities include water handling and treatment, and marketing of excess firm transportation capacity.
The company’s subsidiary, Antero Midstream Partners, is a master limited partnership that owns, operates and develops midstream energy infrastructure primarily to service its production and completion activity. Its exploration and development activities are supported by the natural gas gathering and compression assets. The combination of the two makes this a solid pick for investors.
Stifel has a towering $18 price target on the stock, and the Wall Street consensus price target is $13.66. Shares traded on Friday’s close at $8.69 apiece.
This is one small-cap stock about which the Stifel team currently feels very comfortable. Callon Petroleum Co. (NYSE: CPE) is an independent oil and natural gas company that is engaged in the exploration, development, acquisition and production of oil and natural gas properties. The company focuses on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin.
Callon’s drilling activity focuses on the horizontal development of various prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. The company made a huge $570 million acquisition of 29,000 net acres last May, which more than doubled its Delaware Basin footprint.
Stifel has a price target of $12, while the posted consensus target was last seen at $11.19. The stock was trading at $8.21 a share on Friday’s close.