Stockchase Opinions

James Paulsen Painted Pony Energy PONY-T SELL Apr 09, 2012

(Market Call Minute.) Positive resource growth but gas is such a difficult sector to be in.
$7.820

Stock price when the opinion was issued

oil gas
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BUY
A 10-bagger? Their debt is very low and it is very well managed. They have a massive reserve life. A very big beneficiary of west coast LNG. This could see $15 share prices again. Yes, it could be a 10-bagger or a future acquisition. He is hoping to hear of a LNG Canada announcement soon.
HOLD
People need to realize that because of the construction season, the price of ACO is $0.05 and nobody can make money at that. It is a very cheap stock. They are right on the fairway to fill the LNG Canadian needs. He would stay with it. They have sufficient cash flow.
HOLD
An under-performing natural gas producer that will likely continue to improve its marketing of its production outside of Alberta. He does not currently own it.
BUY ON WEAKNESS
One-year target of $3.40. No dividend. Balance sheet pretty good. He'd potentially own it. Stock is cheap here.
BUY ON WEAKNESS
It will benefit from the LNG business that is coming in the next few years. It is a candidate for tax loss selling. $3.40 is his target. He likes it. It has a monster upside.
DON'T BUY
Well-managed, but Canadian energy has a big strike against it. Most are trading at 3-4x cash flow, which are 15-year lows. Even when there is enthusiasm for oil, the senior oil stocks will move up before these do. Investors don't care about oil stocks now.
SELL
There are a lot of components in the energy sector that are weighing them down. The stock came down so much that it’s looking to be more of a bankrupt company than a turnaround story. The stock’s not looking good so be very careful. It could bounce back, or go lower.
BUY
They have significant assets in the core area that will benefit from LNG. They had a tough second quarter and production came in because they shut in some production. The fourth quarter is going to be good. He thinks they can buy down debt next year. It is a higher beta stock and not owned by institutions. They could be a takeover candidate 3 or 4 years down the road.
DON'T BUY

He is bullish on Albertan-based natural gas because we have declining production and supply, increased take away capacity and inventories are at a 10 year low. The winter will eventually come and then there is the prospect of depleting storage. A lot of Nat gas companies have hedged away their Alberta gas exposure. Pony still leaves him a little uncomfortable, however. He likes BRK-T, TOU-T and ARX-T. The balance sheet of PONY-T leaves him pause.

DON'T BUY
A challenged energy company. Really cheap on a price to book basis. The problem is that most energy companies have no positive price momentum and earnings are not yet growing. Cash flow is beginning to improve, but it is too early to get back into yet.