Cathedral Energy Services (CET-T)

(A Top Pick Nov. 3/17, Down 56%) They looked to have turned around. They are all of a sudden having difficulties again. They sold 6 old rigs and bought 7 new ones. They are having some competition for labour. The company is still on the buy list.

It's on his buy list. They are nominally profitable. They are having trouble getting workers. There are definite red flags but he is happy to hold it. It is a recovery play.

He paid a price higher than this stock’s current level but he thinks it is recovering. He likes current management. They eliminated their debt, but they might be on the verge of taking on some debt now. The company used to pay a dividend and he thinks they might reinstate it. He sees tremendous upside. The rising price of oil is good for Cathedral. A drag on their business is the difficulty in finding new employees and the likely higher cost of their wages.

Revenues have gone up 82% last year and they have a new line of credit. The rig count is rising and the payment per day has gone up dramatically. He thinks this could trade back into the double-digits. He doesn’t know where oil prices will go, but it seems reasonably priced. Yield 0%. (Analysts’ price target is $2.38 )

He holds this in the President’s portfolio. It sells now for half of what he paid for it, it had a near-death experience but they have recapitalized, gotten rid of their high debt, and he likes the management. It has a great balance sheet in this sector. He thinks it could double or triple from here.

He likes this a lot. Had paid $3.11 for it, and it went down to around $.30. They recapitalized and now have debt under $1 million. The Wilkes Brothers, billionaires out of Texas, invest in a lot of companies and companies generally do well when they do that. They’ve been buying a lot of shares, which has helped to spike the stock price. Management has done a really good job in turning the company around. (Analysts’ price target is $2.25.)

A drilling company. Got absolutely hammered with oil/gas prices. Had paid $3.11, and it had dropped to about $0.35. Currently it’s around $1.50-$1.60, so it has come back nicely. Paid off all their debt. Made about $186,000 last quarter. Wilkes Brothers out of Texas have been buying a ton of stock. They bought into Trican Well Services (TCW-T), which has gone up like crazy. He is hopeful this might do the same. (Analysts' price target is $1.75.)

There is starting to be some interest in oilfield services. His initial reaction is to continue to stay away. A lot of these companies are continuing to lose a fair bit of cash. A lot of stocks are starting to turn in anticipation of improving conditions. While drilling activity has started to pick up, and there are talks of potential price increases at the field level, it will be a muted approach and a muted response in pricing, which will restrain profitability for quite a while. Essential Services (ESN-T) would be a more substantial, safer pick in this area.

He has faith in management. Their debt load was not all that heavy when he bought this, and it is not all that heavy now. Revenues for drillers are regularly going down by 50%. A very high risk company. It has tremendous upside if it can recover, but oil/gas prices have to go up.

(A Top Pick May 7/15. Down 85.45%.) This is a question of survival. Their revenues went down 66% last quarter year-over-year. They eliminated the dividend. Have some leading edge technology and there is a reasonable possibility they will survive. If it survives, it could be a 10 bagger.