Compton Petroleum (CMT.TO) Buy, Sell or Hold

Compton Petroleum (CMT.TO)

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BUY

Has been correcting with the oil/gas stocks. It's important to keep an eye on the lows set in 2005. As long as it stays above the October/November low, it will probably start another uptrend. The chart indicates he may be trying to turn and is establishing a bottom.

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DON'T BUY

The biggest problem is their relatively high levels of debt which is at 2.1 X debt to cash flow compared to the industry average of 1 X. This makes it difficult to make acquisitions. All so, being a gas-weighted stock, it is suffering from weak gas prices.

DON'T BUY

Investors are not comfortable with management, so this has not done as well as some others.

TOP PICK

Oil stock. He bought at $16, thinks that you should buy from $15 to $17. The downside risk is $14. He thinks people should own Oil, a mine, and a Gold. So he picked one each for his top picks.

WEAK BUY

It's gotten to the point where it’s a fairly large company so segregating it into a trust and exploratory company makes some sense. Not a lot of BUY recommendations on the street as they haven't met their numbers. Have a number of good assets including coal bed methane which looks interesting. Their production has kind of plateaued.

DON'T BUY

Trading at a little lower P/E than the other banks, but deservedly so since it has the worst capital ratios because of Enron. The next little while, it will be repairing the capital ratios. Would prefer other banks.

WEAK BUY

His model price is $26.11, up 49% differential, but he doesn't really see it achieving that model price. A year from now he can see it reaching $21.68, maybe a 20% total return. A sort of high risk/high reward situation.

PAST TOP PICK

(Top Short Aug 29/05. Up 29%.) Missed on this one. Covered his Short three days later.

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DON'T BUY

This one is a puzzle. It has been trading amazing volumes and as a result, the price has absolutely spiked. This is as a result of a lot of speculation. They have a number of terrific prospects. Have very good real estate for a company their size. There is always speculation that it will be taken over or turned into a trust. Looking a little toppy at the moment.

STRONG BUY

Mostly a natural gas play. Has taken a terrific hit over the last 3 days. A really excellent buy at this price.

BUY

Any of the mid tier oil/gas companies have either been acquired or became a trust. This is the remaining one. They believe they're on a resource trend which is deep and takes a lot of technical work to get it out. Believes they have cracked this nut, but there's an awful lot of work to do and it will take two years and an awful lot of capital. Loats of time on this one.

TOP PICK

Top Short A great research report highlighted the company was spending a great deal of money and were cash flowing about half of that. In the last 2.5 years, it has not grown production and the reserves seems to be growing, so something is wrong. Either production is understated or reserves are overstated. Weak balance sheet. (Do a pair with another oil.)

BUY ON WEAKNESS

Went through a bit of a down period. Had trouble tying in their wells. Seem to be better at finding them. Had some concern, but seems to have sorted it out. Have excellent land that they're drilling. Had quite a run and could possibly check back for a bit.

BUY

Had a big run and then a major set back and still isn't back to its March highs. They seem to be getting their act together. Have some good properties.

SELL

Prefers Storm Cat Energy (SME-X). Sold his holdings and bought Storm Cat instead.

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Compton Petroleum (CMT.TO)