Aerial view of a refinery tower surrounded by the sprawling landscape of pipelines in an oil & gas midstream facility.
Our Methodology
For this article, we used the Finviz screener and identified 20 stocks in the oil and gas sector having Buy or Buy-equivalent ratings from analysts and with share prices under $5, as of September 27. Next, we examined Insider Monkey’s data on 912 hedge funds as of Q2 2024. We narrowed down our list to 10 stocks most widely held by institutional investors and ranked them in ascending order of the number of hedge funds that have stakes in them as of Q2 of 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Imperial Petroleum Inc. (NASDAQ:IMPP)
Number of Hedge Fund Holders: 6
Share Price: $4
Imperial Petroleum Inc. (NASDAQ:IMPP) provides international seaborne transportation services to oil producers, refineries, and commodities traders. The company’s fleet transports refined petroleum products like gasoline, diesel, and jet fuel, along with edible oils, chemicals, crude oil, iron ore, coal, and grains. Headquartered in Athens, Greece, Imperial Petroleum Inc. (NASDAQ:IMPP) has a diversified fleet that includes medium-range refined petroleum product tankers, Aframax and Suezmax tankers, and handysize drybulk carriers.
The company had a strong financial performance in Q2 2024, reporting a net profit of $19.5 million—its second-best quarterly performance ever. This achievement was driven by the solid utilization of its fleet, especially product tankers operating in the tight West of Suez market. Revenues came in at $47 million, slightly lower compared to the same period last year, due to a decrease in fleet size and lower Suezmax rates. Despite this, Imperial Petroleum Inc. (NASDAQ:IMPP) managed to offset these challenges with a strategic focus on spot activity and favorable tanker rates.
From a balance sheet perspective, the company is in a robust position, with a debt-free balance sheet and a strong cash base of approximately $190 million as of June 2024. This liquidity offers flexibility for fleet expansion and navigating market fluctuations. Imperial Petroleum Inc. (NASDAQ:IMPP) profitability has been on an upward trajectory over the last three quarters, showcasing its ability to generate consistent returns even amid seasonal headwinds.
Hedge fund sentiment around Imperial Petroleum Inc. (NASDAQ:IMPP) has also improved, with six hedge funds holding stakes in the company as of Q2 2024, up from four in the previous quarter. This increased interest reflects confidence in the company’s strategic positioning and financial health.
With a net asset value of around $430 million and a market capitalization significantly lower, Imperial Petroleum Inc. (NASDAQ:IMPP) appears to be trading at a discount. The company’s continued focus on strategic acquisitions, efficient fleet utilization, and maintaining a strong financial structure positions it well for future growth and potential value realization for shareholders.
09. Ring Energy, Inc. (NYSE:REI)
Number of Hedge Fund Holders: 11
Share Price: $1.60
Ring Energy, Inc. (NYSE:REI) is an independent oil and natural gas company headquartered in The Woodlands, Texas. The company specializes in the acquisition, exploration, development, and production of oil and natural gas properties. Ring Energy, Inc. (NYSE:REI) operates across a substantial land base, holding interests in 56,711 net developed acres and 2,668 net undeveloped acres in Texas counties, including Andrews, Gaines, and Ward, along with additional properties in Lea County, New Mexico. This strategic positioning in the prolific Permian Basin enables the company to tap into one of the most productive oil regions in the U.S., responsible for nearly half of the country’s daily production.
In Q2 2024, Ring Energy, Inc. (NYSE:REI) reported impressive financial metrics, with a net income of $22.4 million, translating to $0.11 per diluted share, while adjusted net income was $23.4 million, or $0.12 per diluted share. The company achieved total sales volumes of 19,786 barrels of oil equivalent per day (BOEPD), marking a 4% increase from the previous quarter and exceeding guidance. This growth was primarily fueled by oil production, which averaged 13,623 barrels per day, a 2% rise from Q1, and surpassing expectations.
The company’s operational efficiency is underscored by its generation of $37 million in adjusted free cash flow during the first half of 2024, reflecting a remarkable 60% increase compared to the previous year. This growth can be attributed to the strategic acquisition of Founders, completed in August 2023, which has further strengthened Ring Energy, Inc. (NYSE:REI) market position. Additionally, the company successfully drilled and completed 11 wells in Q2, aligning with its operational targets.
With 11 hedge fund holders as of Q2 2024, up from 9 in the previous quarter, market confidence in Ring Energy, Inc. (NYSE:REI) is evident. The U.S. Energy Information Administration forecasts a nearly 8% increase in crude oil output in the Permian Basin for 2024, aligning with Ring Energy, Inc. (NYSE:REI) focus on high-value formations. As the company continues to enhance production and capitalize on market opportunities, it stands out as a compelling investment within the oil and gas penny stock sector.
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Publish date : 2024-09-28 22:20:00
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