$BBG The Best Cheap Stocks to Buy for $10 or Less
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Posted On: 05/05/2017 2:15:59 PM
$BBG The Best Cheap Stocks to Buy for $10 or Less: Bill Barrett Corporation (BBG)
Stock Price: ~$4.00
The rally in crude has faded over the past few weeks, even as broad markets have performed reasonably well. In turn, the early-year optimism for exploration and production stocks has dimmed, with shares in the space falling as much as 30% in the past two months alone.
For contrarian investors who see strength in oil ahead, that leaves a number of cheap stocks to choose from. Chesapeake Energy Corporation (NYSE:CHK) looks headed toward an eight-month low near $5. Sanchez Energy Corp (NYSE:SN) has been nearly halved since early February, despite impressive production in the stacked Eagle Ford play.
The choice here is Bill Barrett Corporation (NYSE:BBG).
Bill Barrett targets the Denver-Julesberg basin in eastern Colorado (and parts of neighboring states). Despite general optimism toward that play, BBG has hit a 52-week low under $4, and now trades at barely 4 times EBITDA. That’s simply too cheap a price.
A pending debt refinancing would remove convertible notes off the balance sheet, and likely extend BBG’s debt maturities. Moody’s has upgraded the company’s credit rating in response. The company is guiding for an acceleration in production in 2018, and any cooperation from the crude and natural gas markets could lead to quick and substantial margin expansion.
Just two months ago, investors seemed to believe that better drilling methods and lower costs could offset “lower for longer” crude prices. Clearly, that sentiment has shifted. But for companies like Barrett, breakeven costs are coming down. With stable oil prices, profits should come eventually. And any help from commodities should send BBG — and SN and CHK, for that matter — back up nicely.
Stock Price: ~$4.00
The rally in crude has faded over the past few weeks, even as broad markets have performed reasonably well. In turn, the early-year optimism for exploration and production stocks has dimmed, with shares in the space falling as much as 30% in the past two months alone.
For contrarian investors who see strength in oil ahead, that leaves a number of cheap stocks to choose from. Chesapeake Energy Corporation (NYSE:CHK) looks headed toward an eight-month low near $5. Sanchez Energy Corp (NYSE:SN) has been nearly halved since early February, despite impressive production in the stacked Eagle Ford play.
The choice here is Bill Barrett Corporation (NYSE:BBG).
Bill Barrett targets the Denver-Julesberg basin in eastern Colorado (and parts of neighboring states). Despite general optimism toward that play, BBG has hit a 52-week low under $4, and now trades at barely 4 times EBITDA. That’s simply too cheap a price.
A pending debt refinancing would remove convertible notes off the balance sheet, and likely extend BBG’s debt maturities. Moody’s has upgraded the company’s credit rating in response. The company is guiding for an acceleration in production in 2018, and any cooperation from the crude and natural gas markets could lead to quick and substantial margin expansion.
Just two months ago, investors seemed to believe that better drilling methods and lower costs could offset “lower for longer” crude prices. Clearly, that sentiment has shifted. But for companies like Barrett, breakeven costs are coming down. With stable oil prices, profits should come eventually. And any help from commodities should send BBG — and SN and CHK, for that matter — back up nicely.
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