Callon Petroleum is engaged in the exploration, development, acquisition and production of oil and gas properties. The Company’s properties are geographically concentrated primarily offshore in the Gulf Coast Region both onshore and offshore.
Fundamentals:
As I've mentioned in the introduction, oil and natural gas have been on fire recently. Nothing tells the story better than a chart so see below for visuals of the impressive turnaround in the two commodities:
Oil began it's reversal a few months ago, but natural gas has turned the corner only a few weeks ago. Most of the credit for the turnaround goes to China because of their stimulus and massive energy needs. As natural gas continues it's reversal, you can be assured that more and more money will flow into the sector. The main beneficiaries from the standpoint of share price appreciation will be the low float stocks furthest from there 52 week highs. CPE has a float of less than 10 million shares and currently sits at $2.93/share with a 52 week high of over $28/share.
News:
On 5/12/09 the company reported Qtr. 1 2009 net income of $2.4 million, or $0.11 per share, significantly exceeding analysts consensus, which was a net loss of $0.07 per share. The biggest reason for the upside surprise was due to Callon's successful hedging strategies. For example, in spite of depressed oil prices averaging around $43/barrel for the quarter, their realized oil price was over $60/barrel. The stock moved 30% today in response to the report. Because the price of oil and natural gas continues to find higher trading ranges, it is reasonable to believe that next quarter's earnings will be even better.
Technicals:
See the chart of Callon Petroleum below:
As you can see, this stock bottomed in March and has been on a steady climb ever since forming a (very bullish) cup handle. After a stock has a major run, the earnings report often determines if the momentum is stopped or if the trend continues. I believe the favorable report catapults CPE further along its current path.
Catalyst to move CPE higher:
I've already mentioned the significance of the earnings report, but I see several other factors that will move the stock up:
- Expect analyst upgrades and institutional buying. They'll wait for a nice pullback and then they will "back up the truck". Look for both to happen in the next couple of weeks.
- Expect Insider buying. There has been no insider buying or selling since the end 2008. Now that the insider "quiet period" is over and it is fairly clear that prices are on the rise, look for management to begin accumulating shares again.
Conclusion
In conclusion, oil and natural gas stocks are highly dependant upon commodity prices. As the economy recovers and more money is printed, it is no surprise that the depressed prices of 4 or 5 months ago would be a distant memory. I believe oil may level out at this level, but natural gas has a ways to go. This should keep the sector moving in a positive direction and reward those companies with strong management and results. Be patient with CPE. After an already large move, you may or may not hit your target right away, but slow and steady can also make you a lot of money. Callon Petroleum Company(CPE) is the next perfect stock.
Im in at 2.86. Lets so how this baby handles. Hopefully today will be a great day!
ReplyDeleteToxicity,
ReplyDeleteWhat brokerage due you use that allows you to trade off-hours???
i think any can.. its in NYSE. just have to use limit orders etc..
ReplyDeleteI use schwab though.
ReplyDeleteDon't get discouraged about today guys. This is somewhat expected. There's profit taking going on in the entire energy sector today. Trust me, this will move up in the days ahead.
ReplyDeleteYea, DOW really took a hit today with the retail news also.
ReplyDeleteWhat about GHII? is that over and done.....
ReplyDeleteAnd that does say 4/12/2009 right?? should be 5/12/2009? or Im lost....
ReplyDeleteHAYZ didn't turn out so perfect...
ReplyDeleteAgreed with dingleberry... sadly I had a lot riding on that too... :( but its my own fault, should have realized sooner...
ReplyDeleteryan2044, I don't think GHII is done. It's consolidating nicely after an already big move. I'd wait at least 2 to 3 weeks after the Chinese investor conference next week before I put out a verdict on that one.
ReplyDeleteDingleberry, HAYZ was definitely a disappointment to me, but it did meet my 80% to 100% gain criteria. So, I'm still okay with the selection. To be frank, it was mainly my own greed that made it a disappointment.
Card,
ReplyDeleteSorry off topi: Do you think HAYZ could go up to 20cents everagain in near future??? that was my cost or i should not wast my time and come out of it??? Please advice.
Thanks.
Dave, I think it depends on your patience level. If you're willing to wait a month or so, I think it'll get there. If it pains you to see $0.05 - $0.10 per share under your HAYZ holdings for the next 2 or 3 weeks, then sell.
ReplyDeleteCard,
ReplyDeleteI found your blog in late March, not soon enough to get into the first run of HAYZ, but I got in at about 26K shares averaged to 0.24 and have been holding since. I did buy another 12.5K at 0.175, but was able to get those out on Tuesday at 0.18 so with fees I about broke even there.
Now for the 26K I still have. Why is there hope in waiting a month?
Investor9, this is my opinion of what will happen: When a company goes bankrupt, short sellers flood the stock big time. Eventually, trading groups will see this as an opportunity and they'll wait until there's a confirmation by the charts that the bottom is in. After they believe the stock has bottomed, which is usually confirmed when a stock trades in the same range for about a week to a week and a half, aggressive buying takes place. Once the short sellers get a sense of this happening, they'll begin cover causing a short squeeze. That momentum as well as other stock chasers getting into the action causes the shares to temporarily spike. That's when you want to sell.
ReplyDeleteWhile I understand your logic, and see how HAYZ could be used as a trading vehicle for some time I am not sure if this is a similar situation.
ReplyDeleteThe reason being that the Chapter 11 reorganization has been pre-negotiated in this case. There is going to be a lot less wrangling in the courts, because they have already agreed and set on terms with the debt holders.
According to the latest press release (available here: http://ir.hayes-lemmerz.com/releasedetail.cfm?ReleaseID=384228) which went out this evening, the final hearing date for the DIP financing is on June 10th, 2009.
I really hope that we see a spike before this, but considering these facts what do you honestly see the chances of this being?
Thanks. I'm no expert, but I think from that explanation I can get where I need to be, assuming trading groups will see HAYZ as an opportunity. I'm not sure why they would see this stock as an opportunity, but maybe they have their statistics on broken bankruptcies and how to make a buck from them or something. If HAYZ idea is 100% cancellation and the smart people they pay lots of money to are right then eventually those trading groups just lose out 100% don't they? I trust you on all this, but to a simple mind its quite confusing from a logic standpoint.
ReplyDeleteEuro and Investor9, I believe the traders will be long gone before any court proceedings or share cancellations take place. People will see HAYZ as an opportunity, because traders love to see > $0.10 stocks on a major exchanges (though HAYZ's run on a major exchange probably won't last long). You can literally buy hundreds of thousands of shares for a couple thousand bucks. That's chump change for a serious traders. Also, everybody knows when a stock on the NASDAQ or NYSE is making a big move. It's much harder to find the intra-day big gainers on pinksheets and OTCBBs.
ReplyDeleteI can't say with 100% certainty that this scenario will happen with HAYZ because there are always exceptions, but I have seen what I believe will happen time and time again the last 6 months. Only time will tell.
I wouldn't get in on this one folks. Oil was up due to the fall of the dollar -- not a rise in demand for oil. Many signs are saying the economy is NOT getting better yet as many had hoped. There are several articles also saying that that the stock market may test the March lows!
ReplyDeleteI'm not shorting this or any other stock. Just take this view into consideration before you get into this stock.
A good thing to consider is why this stock went down today when the news about the company was so good? The predicted big drop in oil demand may be the answer.
Just food for thought. I would not buy this in light of these very real risk factors. Right about now could be the worst time to buy this if these factors come true since there was just a rise in this stock you could get trapped in it.
U.S. 2008 oil demand to drop most since 1980: EIA
http://www.reuters.com/article/ousiv/idUSTRE4AB76220081112
So in the panic selling after a BK announcement, shorts always overborrow to collect all the price drops and then overown borrowed positions which they must cover so that whenever some force at low volumes makes price increase then shorts are squeezed into covering a rising price in a short time frame which squeezes them and gives institutions and those who are patient a better point of exit.
ReplyDeleteIs that close?
Investor9, that's pretty close. However, I'd change the word "always" in your statement to "often times".
ReplyDeleteI can see it happening right now. price closed at .08 yesterday and reached .118 this morning and is staying above .10 so I think that's the first evidences of shorts covering. I assume this is early and that one hard squeeze moment may not take place for a few weeks or even a month. I could get out now with 50% of investment, but I think there will be better squeeze moments.
ReplyDeleteCPE.. dropping like a rock
ReplyDeleteI stuck with GHII and so far so good! got in at .19 and its at .24 today with Monday the 18th coming and the meeting thing taking place Im excited to see waht happens... just dont want to bail to soon, or wait to long on this..I could get out now with a nice profit, but I think I could stay longer and get a bit more out of it...
ReplyDeleteThanks Card...
I got in GHII at the same price as you Ryan.
ReplyDeleteI am going to hold off and hope for more than a 5 cents per share profit.
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ReplyDeleteRyan2044 and Tim, looks like your patience is being rewarded with GHII. I figured there would be some buying prior to the conference. I recommended the stock when it was at 13 cents. So, with today's close at 26 cents, I guess I can say it was "perfect"! Good luck guys.
ReplyDeleted, I know CPE looks bad now, but I honestly feel that this is a temporary set back. Despite the last couple of days, the chart is still showing an upward trend as long as the stock closes above $2.25. The DOW may test 8000 next week, but if it does, I think we'll bounce off of it hard. Remember, CPE is not an "instant gratifier" like some of the other picks. I didn't expect it to go down this much, but the fact that the downward volume is low is encouraging.
I have Faith!.. lol, at least i need to at this point... Anyways, im holding CPE for a min of 2 months, we shall see!
ReplyDeleteCard ... A lot went down with HAYZ today after hours in filings and info. I wasn't expecting only three more days of trading on NASDAQ. Any thoughts on todays info and filings and how it could affect things? Is it no change, just moved to a different board? I do make my own decisions, but you do give me food for thought.
ReplyDeleteHi Card,
ReplyDeleteThank you very much for this great and useful site with very successful stock pics. Unfortunately, I usually discover your latest pick too late! So my question is: Is it possible to receive an alert (by e-mail or otherwise) when a new pick appears? Maybe something need to be configured in the web browser? Thank you very much for your response and keep them coming!
All the best, Peter
Sorry for my delayed response Investor9. Actually, I think Friday's releases does change things. I was not expecting the delisting to occur so quickly. That is one thing that is different from the other companies filing BK. Usually, you get your big spike prior to the actual delisting, but generally there is more time in that gap. That's not to say that a spike still can't happen, but I'm beginning to believe that Friday may have the last decent selling opportunity. This is all my opinion of course.
ReplyDeleteThanks for reading bighoper! You are not the first person to have asked that question. So, I'll give you the same answer I've given everyone else. I currently don't have any email alerts at this time, but I may add that as a premium feature in the future, if the blog becomes really popular. Right now, I'm just trying to encourage frequent visits to the blog. Just know that I always post either on the weekend or late at night between 10PM-1AM eastern standard time. There's no set schedule. If I see an opportunity, I post.
ReplyDeleteCard,
ReplyDeleteWhen you have a few extra moments, can you please tell me any views that you might have on AMNG (THE AMERGENCE GROUP INC NEW)?
The stock is up huge today. In your opinion, is this a "pump and dump" or do you think this stock might actually offer some benefit to possible investors?
Thanks in advance.
RF
Raiders Fan, it's interesting that you mentioned AMNG. I checked it out a couple of weeks back after the PR on the license agreement. On paper it sounded great, but my problem was that I could not find much on PanPacific. I'm typically skeptical of stocks when I can't verify the credibility of the revenue source. Although I must admit that it's harder to verify companies from other countries.
ReplyDeleteIn my opinion, I think it may move short term (like today and possibly tomorrow), but be careful of the dump.
This comment has been removed by the author.
ReplyDeleteCard, It appears that the discussion on HAYZ has got shifted here! Well, now that it seems that this is a disaster in the making, what happens to the common stock? Is it worthless or does it listed to some other exchange like OTC or Pink Sheets? IMO, if the stock is still tradeable at other venues, there is still value and given a decent recovery time frame, may yet yield some decent dividends. Do correct me if I am wrong- your thoughts please.
ReplyDeleteCard, I don't see how you can say that friday will be the last decent selling opportunity. From what I gather, May 21st will be the end of dayz for HAYZ. The stock will be suspended, not transfered to another market. And according to the SEC report, current stock holders get nothing.
ReplyDeleteAm I missing something?
Card,
ReplyDeleteThanks for your willingness to reply. HAYZ is my first investment ever and it was the most I could afford to put in something that is investment. My holdings are 26K at .24. HAYZ execs and board all dumped their shares today, Stock will be off NASDAQ as of Thursday and price is hanging around .08. It's so depressing to know HAYZ can do that. I know equity is equity, but its not a stretch to believe they could have fought their way through this. Any encouraging words for a literal first time investor who, if I sell at .08 will lose 2/3 of an amount which is relatively very large to me (though still investment money). I spoke to two corp BK attorneys in Delaware today and while they were both quite nice to talk to and talked at length, we were both grasping for something to sink teeth into. Naked shorting angle is possible to work only if you have a Deep Throat. Fiduciary duty can likely be shown to be upheld though some of that is an art, legit accounting rules, but still an art. I just sit here quietly. I've worked every angle I know to work on this. Now its realize the loss and maybe try elsewhere or wait it out and monitor it minute by minute and maybe get lucky with a small higher window for a moment. Or just let it sink to zero. I filed a claim in the BK because they filed and immediately called the share plan to cancel and make worthless so its an avenue. Just sitting here run over by a train.
Sandy, you are correct to some degree. Just because HAYZ is delisted doesn't mean it is worthless. It does have "tradeable value".
ReplyDeleteDingleberry, HAYZ will become HAYZQ and there are some traders who trade exclusively "Q" stocks. So, there is a chance for it to pop, but typically the size of the pop isn't as large. I felt that if there was more time before the delisting 25-30 cents was possible. As a "Q" stock, I'm only thinking 15 cents. I could be wrong though.
Investor9, don't get discouraged. In the stock market it's give an take. You'll get a big gain just as fast as you get a big lost. I picked up SFIO at 3 cents last week and sold the next day for 31 cents. It ended up going to 55 cents but I sold too early. Of course that doesn't happen everyday, but it goes to show you that a loss is not the end of the world. Just hang in there!
Thanks Card, but honestly have you ever seen anytbing like HAYZ get so ugly so fast? one week and a few hours market closed and we were all still very hopeful. Now shares will be cancelled, Execs and board all sold out and off NASDAQ. And this is the single largest manufacturer of wheels, one of the most basic needs for transportation that exists. Sorry for the drama, but really wondered if anyone has seen something like that from a 2 billion revenue company at that speed and when they had just filed ch 11 8 years earlier. I won't go on after this post, but wondered if you had seen anything like it at that size company outside of the financial companies last year.
ReplyDeletefyi, I'm out at .07 as of this AM. Bought the day after the headline of "Can HAYZ be Perfect Twice" and my only positive exit point was for one day, May 11 before CH 11 was announced that night. Lost 2/3 of my investment on HAYZ.
ReplyDeleteI'm in CPE now at 2.67 which I thought was a fair entry point though I can tell it's gonna be a slow, boring wait to next quarter's release.
ReplyDeleteThis is about HAYZ. I have been chatting with the Investor Relations at Hayes. The take is the same as posted on the website. The stock remains as is till the re-structring is complete. The time frame is uncertain. The shares are being delisted as of tommorow. There is no plan to get them listed on OTC/Pink Sheets by the company. If indeed they do get listed, it will be through the efforts of some other individual/organisation. Subsequent to the re-structring, it is envisaged that the new owners(who likely are a consortium of creditors who have extended the DIP), would issue new shares which may another symbol and may trade at a different exchange. The present shares would be worthless when the re-structring is complete and new shares issued based on the new equity. This is what I have assimilated thus far, so if anyone is still holding onto the present shares after tommorow, it is extremely risky as they may be worth zero, which they just may be as the price drifts towards that mark. My take would be to take all your losses and hope that Card comes up with some other miracle! We wait for the next 'Perfect Stock'
ReplyDeleteHas anyone heard anything about TPGI? It was mentioned two weeks back. Is it dead now or a perfect stock?
ReplyDeleteSlight correction Sandy, HAYZ will trade tomorrow and cease being listed on NASDAQ Thursday. I think you meant that, but just wanted to clarify. The smart people HAYZ hired for restructuring have their petal to the metal to complete BK ASAP. The BK judge just so happens to be the same BK judge HAYZ had in 2001. The judge could pull a game changer technically, but nothing points to it. But as HAYZ board and execs taught us, things may catch you by surprise like a 9:45 PM CH 11 BK filing just as the stock value was shooting up in the .30s. Coincidental timing? I don't know.
ReplyDeletePhil, TGPI was perfect for about 2 or 3 days after that post and then was a victim of profit taking. As I've mentioned before, stocks can only be perfect for a finite period of time. Moving from the $1.20s to the $2.20s so quickly was apparently too much too fast and it fell hard. I've got a feeling that it may bounce back again from these current levels, but it'll move a lot slower. Currently though, it is not a perfect stock IMO.
ReplyDeleteCPE is getting annoying... Positive earnings, so it goes down.... Oil price is up, so it goes down again... wtf
ReplyDeleteJust a heads up on GHII, hope everyone held strong like Card said... its at .26 with a possible BIG day today.. third quarter results are out....
ReplyDeleteThanks again Card! I was worried, but you said stay till after May 18 and see what happens! looking perfect so far!
Card,
ReplyDeleteAre you planning on posting another one of your perfect picks anytime soon? Thanks for all the help, Really appreciated.
Siddharth, I'm looking hard, but nothing is currently jumping out at me. I think a lot of it has to do with market finally cooling from a 2000 pt rise in the Dow over the last few months. I don't know if you read the comments much, but it looks like I blew the opportunity of posting about TTNP.PK. I mentioned that I almost made a post about it when it was at 70 cents, but I was uncertain of how the market would value the already steep price jump. In my opinion it is the best stock to buy right now, but I'm not sure if it's a double from here (my criteria for a perfect stock). However, if your looking for a quick 30 to 40 percent, this is the play. Currently, it's at $1.30, but it should hit at least $1.70 fairly quickly.
ReplyDeleteCard,
ReplyDeleteIts very true that the market is cooling off, i had read your post about TTNP.PK it was an excellent pick at that time. I am going to try to wait and see if the stock comes back at $1 then ill buy it. Thanks again for all the good work and feed back.
Siddharth
I've heard a few analysts trumpet Chesapeake Energy Corporation as a great buy and a potential double.
ReplyDeleteThe price is historically low, but the company is still losing money. I am curious what others think about it.
Tim, I think it could happen if the institutions get on board and natural gas moves higher. Right now, nat gas has reversed back down well below $4. That's why CPE has been moving sideways the past week or so. If nat gas heads back to at least $5, all these oil and gas stocks will begin to move with more strength.
ReplyDeletemy pick would have to be ANO on the TSE. Card can you please take a look and do your magic.. tell me if Im wrong. I bought at 2.44 and waiting for them to be around $5...
ReplyDeleteRyan2044, I don't know much about ANO. I'll have to check it out.
ReplyDeleteNot sure why so many analysts prefer Chesapeake over XTO. CHK is losing money, while XTO is making money but still has a P/E of 12.
ReplyDeleteBoth are much closer to their 52 week lows than their 52 week highs, but CHK is much further off of its low than XTO.