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. Often 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.
Every week, we screen our 24/7 Wall St. research database looking for stocks with Buy equivalent ratings at major firms and priced under the $10 level (last week’s picks included Northern Oil & Gas and Zynga), and this week was no exception. The analysts at Stifel are positive on the energy sector for 2020 and they have five stocks rated Buy that could provide investors with some solid upside potential. While more suited for aggressive accounts, these stocks could prove exciting additions to portfolios looking for solid alpha potential and to take advantage of a potential move higher in the energy sector.
This is a small-cap stock that the Stifel team feels very comfortable about currently. Callon Petroleum Co. (NYSE: CPE) is an independent oil and natural gas company engaged in the exploration, development, acquisition and production of oil and natural gas properties. It focuses on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin.
Callon Petroleum’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.
Callon made a huge $570 million acquisition of 29,000 net acres last May, which more than doubled the Delaware Basin footprint. The company is still trying to acquire Carrizo, which it made an all-stock bid for back in the summer.
The Stifel price target for the shares is $8, and the Wall Street consensus target is lower at $7.57. The stock ended trading on Friday at $4.54 a share.
Carrizo Oil & Gas
This top energy stock for value buyers to consider has been absolutely mauled this year. Carrizo Oil & Gas Inc. (NASDAQ: CRZO) is a Houston-based energy company actively engaged in the exploration, development and production of oil and gas from resource plays located in the United States. Carrizo’s current operations are principally focused in proven, producing oil and gas plays, primarily in the Eagle Ford Shale, the Utica Shale in Ohio, the Niobrara Formation in Colorado and the Marcellus Shale in Pennsylvania.
Last year the shares traded in the mid-$30s and have been absolutely hammered in 2019. Callon Petroleum announced back in the summer it would buy Carrizo Oil & Gas for $1.2 billion in stock, the latest in a string of acquisitions as energy companies scale up to boost cash flow and quell investor criticism over lack of returns. The Paulson hedge fund has voted against the acquisition. If the deal goes through, Carrizo shareholders will receive 2.05 Callon shares for each share held. Shareholders will vote on November 14.
Stifel has a stunning $15 price target on the stock, and the posted consensus target is lower at $12.37. Shares closed at $7.72 on Friday.