Brent crude jumped close to a three-year high recently, while U.S. crude prices jumped another 1.4% to $78.93 per barrel yesterday as OPEC shows no intention of increasing supply considerably. Bank of America (BAC) expects oil prices to surge to more than $100 per barrel in the upcoming winter season as demand will likely spike.
Analysts are also expecting an unprecedented spike driven by panic-buying of oil in the near term, given an expected tight supply in the winter. As the oil prices are expected to skyrocket, small-cap oil stocks with immense growth potential should benefit.
That’s why investors should consider stocks such as GeoPark Limited (GPRK), Transportadora de Gas del Sur S.A. (TGS), Vista Oil & Gas, S.A.B. de C.V. (VIST), and Adams Resources & Energy, Inc. (AE), to add to their portfolios.
GeoPark Limited (GPRK)
GPRK is engaged in the development and exploration of oil and gas reserves. The company is headquartered in Santiago, Chile, and has a market capitalization of $883.18 million.
In August, GPRK doubled its quarterly dividend to $0.041 per share, which was to be paid on August 31.
In the second quarter that ended June 30, GPRK’s total revenue increased 197.3% year-over-year to $165.60 million. This can be attributed to a 214.1% year-over-year rise in the sale of crude oil to $153.90 million. Operating profit stood at $19.20 million, up substantially from its negative year-ago value.
The consensus EPS estimate of $0.88 for the current quarter (ending December 2021) indicates a 254.4% year-over-year increase. Likewise, the consensus revenue estimate for the ongoing quarter of $206 million reflects an improvement of 93.1% from the prior-year quarter.
The stock has gained 84.2% over the past year to close yesterday’s trading session at $14.46. It has also gained 19.6% over the past month.
GPRK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A which equates to a Strong Buy rating in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
GPRK has a Growth and Momentum grade of A, and a Quality grade of B. In the 49-stock Foreign Oil & Gas industry, it is ranked #8. This industry is rated A.
Click here to see additional grades for GPRK (Value, Stability, and Sentiment).
Transportadora de Gas del Sur S.A. (TGS)
TGS is a Buenos Aires, Argentina-based company focused on transporting and distributing natural gas over the country. The company primarily operates through four segments - Natural Gas Transportation Services; Liquids Production and Commercialization; Other Services; and Telecommunications. It has a market capitalization of $775.34 million.
For the fiscal second quarter that ended June 30, TGS’s revenue increased 11% year-over-year to Ps.17.88 billion ($180.95 million). Total comprehensive income rose 29.8% from the prior-year quarter to Ps.3.39 billion ($34.33 million), while earnings per ADS improved 31.4% from the same period last year to Ps.22.52.
Street EPS estimate of $0.34 for the current year (fiscal 2021) reflects a 13.3% year-over-year improvement. Moreover, TGS has an impressive surprise earnings history as it has topped consensus EPS estimates in three out of the trailing four quarters.
TGS’s stock has gained 18.1% over the past year and 6.2% over the past six months to close yesterday’s trading session at $5.15.
It’s no surprise that TGS has an overall grade of A, which translates to a Strong Buy rating in our POWR Ratings system.
TGS has a B grade for Value, Momentum, Stability, Sentiment, and Quality. It is ranked #6 in the Foreign Oil & Gas industry.
Click here to see additional TGS’s Growth Grade.
Vista Oil & Gas, S.A.B. de C.V. (VIST)
VIST operates as an oil and gas exploration and production company in Latin America. The company’s primary assets are located in the Vaca Muerta shale oil and shale gas play and additionally owns assets in Mexico. It is based in Mexico City, Mexico, and has a market capitalization of $534.84 million.
On September 16, VIST acquired 100% of the capital stock in ConocoPhillips Argentina, a subsidiary of crude oil and natural gas exploration company ConocoPhillips Petroleum Holdings B.V. The acquisition is expected to increase VIST’s acreage in Vaca Muerta and strengthen its foothold in the region.
In June, the company agreed to develop five pads of 4 wells in Bajada del Palo Oeste with oil trader Trafigura Argentina S.A. Additionally, the two companies entered into a crude oil marketing agreement. This partnership is expected to increase the company’s production capabilities and facilitate export.
VIST’s total revenues increased 222.7% year-over-year to $165.28 million in the second fiscal quarter that ended June 30. Adjusted EBITDA went up 904.4% from the prior-year quarter to $102.34 million. For the period, operating profit and net profit came in at $51.20 million and $5.51 million respectively, up substantially from their negative year-ago values.
Street expects its EPS to increase 178.1% year-over-year in the ongoing quarter (ending December 2021) to $0.25. Street revenue estimate of $159.50 million for the current quarter indicates a rise of 100.5% from the prior-year quarter.
VIST’s stock has gained 136.3% year-to-date and 134.5% over the past six months to close yesterday’s trading session at $6.05.
VIST’s POWR Ratings reflect this promising outlook. The stock has an overall grade of B, which equates to a Buy rating in our proprietary ratings system.
VIST has a Momentum grade of A, and a Growth, Value, and Sentiment grade of B. It is ranked #26 in the same industry.
To see additional grades for Stability and Quality, click here.
Note that VIST is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
Adams Resources & Energy, Inc. (AE)
AE markets, transports, and stores crude oil in the United States. The company also engages in tank-truck transportation of liquid chemicals and dry bulk through two of its completely owned subsidiaries GulfMark Energy, Inc. and Service Transport Company. It has a market capitalization of $138.32 million.
In the fiscal second quarter that ended June 30, AE’s total revenue increased 219.6% year-over-year to $486.74 million, while operating earnings rose 115.8% from the same period last year to $6.34 million. Adjusted net earnings and adjusted net earnings per share stood at $1.86 million and $0.44, respectively, registering a substantial increase from their negative year-ago values.
Analysts expect its EPS to increase 1,317.4% year-over-year to $3.26 in the current year (fiscal 2021). Likewise, the consensus revenue estimate of $1.86 billion for the ongoing year reflects an 82.3% year-over-year increase. In addition, AE has topped consensus EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 63.4% over the last year to close yesterday’s trading session at $32.49. It has also gained 34.8% year-to-date.
AE’s stock has an overall grade of B, which translates to a Buy rating in our POWR Ratings system. The stock has a B grade for Growth, Value, and Quality. In the 93-stock Energy – Oil & Gas industry, it is ranked #4.
In addition to the grades we’ve stated above, one can see AE’s grades for Momentum, Stability, and Sentiment here.
GPRK shares were trading at $14.56 per share on Wednesday afternoon, up $0.10 (+0.69%). Year-to-date, GPRK has gained 12.82%, versus a 17.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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