I am bullish on oil stocks, particularly focusing on oil & gas penny stocks in this column.
I believe these stocks could potentially surge by 100% by the end of 2025, driven by factors such as potentially higher realized oil prices and geopolitical tensions.
The penny oil and gas stocks I discuss here are viewed as undervalued companies with strong fundamentals and promising cash flow outlooks.
Ring Energy (NYSE:REI) is highlighted as a significantly undervalued oil and gas penny stock poised for growth, having returned 34% in the last month.
However, over the past 12 months, the stock has remained stable. Ring Energy currently holds a market valuation of $370 million, with a PV10 (present value of estimated future oil and gas revenues, net of forecasted direct expenses) of $1.65 billion.
In 2023, the company reported revenue growth of 4% to $361.1 million, with adjusted EBITDA growth of 21% year-on-year to $236 million.
Ring Energy's strategic focus on acquisitions, combined with its leverage at 1.62x, is expected to continue driving production growth.
Nordic American Tankers (NYSE:NAT) is also noted for its robust dividend yield and low forward price-earnings ratio of 7.3. With a dividend yield of 11.8%, NAT stock is considered undervalued, with potential total returns of 100% by the end of 2025.
Nordic American, a provider of crude oil tankers, currently operates a fleet of 20 tankers.
The company reported an average time charter equivalent rate of $39,170 per day per ship in 2023, with operating costs per day per ship at $9,000.
Athabasca Oil (OTCMKTS:ATHOF) has experienced a 95% rally in the last 12 months and is believed to remain attractively valued, likely to double from its current levels of $3.9.
The company boasts a strong reserve base with 1.2 billion barrels of oil equivalent of proved reserves and contingent resources of one billion BOE.
Athabasca reported an adjusted fund flow of $295 million for 2023 and expects more than $1 billion in free cash flows between 2024 and 2026.
It's important to note that InvestorPlace does not publish commentary about companies with a market cap of less than $100 million or trade less than 100,000 shares each day due to the risks associated with such "penny stocks."
Faisal Humayun, a senior research analyst with 12 years of industry experience in credit research, equity research, and financial modeling, authored this column. His focus areas include the technology, energy, and commodities sector.