Grab These 2 Stocks Under $10 Rated 'Strong Buy' in the POWR Ratings
Although the major stock indexes hit record highs this week, rising inflation could perplex investors in the coming weeks. So, we think the stocks of VAALCO Energy (EGY) and Blueknight...
Although the major stock indexes hit record highs this week, rising inflation could perplex investors in the coming weeks. So, we think the stocks of VAALCO Energy (EGY) and Blueknight Energy (BKEP), which are currently trading at less than $10, could be great picks now. They are rated "Strong Buy" in our proprietary ratings system, and we think hold significant upside potential owing to their impressive fundamentals and solid growth attributes. Read on to learn more.
Although reports pointing to reduced risks from the COVID-19 omicron variant, and easing pandemic restrictions, have powered the S&P 500 this week, inflation concerns remain at the top of investors' minds as a turbulent 2021 comes to a close. Economists fear that the coronavirus pandemic has ushered in a new age of inflation disparity, with poor people bearing the brunt of rising prices. In addition, as pandemic-related federal benefits phase out and President Biden's massive care spending bill languishes in Congress, investors are taking a cautious approach going forward.
Considering the current market uncertainty, low-priced stocks with strong growth potential could be appropriate bets now. A significant rise in retail trading activity could assist low-priced stocks in outperforming their pricier counterparts because retail investors tend to dabble in low-priced companies due to their limited cash and desire to own more shares.
VAALCO Energy Inc. (EGY) and Blueknight Energy Partners L.P. (BKEP) are two such stocks, which are trading at less than $10 and we think can generate substantial returns going into 2022 based on their strong revenue and earnings outlook. They are currently rated "Strong Buy" in our proprietary POWR ratings systems.
VAALCO Energy Inc. (EGY)
Houston, Tex.-based EGY acquires, explores for, develops, and produces crude oil and natural gas. The company holds an Etame production sharing contract for the Etame Marin block, which is located offshore in the West African Republic of Gabon.
Last month, EGY reported the completion of the two previously announced workovers at the Etame field offshore Gabon, adding roughly 1,050 gross barrels of crude oil per day.
During the third quarter, ended September 30, 2021, BKEP's revenue increased 206.2% year-over-year to $55.89 million. Its operating income grew 328.2% from its year-ago value to $20.03 million. The company's net income increased 316.4% year-over-year to $31.72 million, while its EPS surged 307.7% from the prior-year quarter to $0.53 over this period.
The company is expected to generate 62.7% revenue growth next year. In addition, its EPS is estimated to increase 152.9% year-over-year to $0.43 in fiscal 2022. EGY's stock has gained 93.7% in price over the past year and 19% over the past three months, closing yesterday's trading session at $3.35.
EGY's POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
EGY is also rated an A grade for Sentiment, Momentum, and Quality. Within the B-rated Energy – Oil & Gas industry, it is ranked #1 of 78 stocks. To see additional POWR Ratings for Stability, Growth, and Value for EGY, click here.
Blueknight Energy Partners L.P. (BKEP)
BKEP in Oklahoma City, Okla., provides integrated terminalling services to businesses in the United States involved in producing, distributing, and handling liquid asphalt. It had 53 terminals across 26 states as of March 4, 2021.
This month, BKEP agreed to acquire an asphalt terminal, a 200-acre industrial park in Colorado, and a separate deal to organically expand the storage, planning, and product capabilities of the BKEP-owned asphalt terminal. The project is consistent with the company's expansion plan and will also help grow its asphalt terminalling portfolio.
During the third quarter, ended September 30, 2021, BKEP's revenue increased 4.6% year-over-year to $30.34 million. Its operating income increased 8.5% year-over-year to $11.41 million. The company reported a net income of $12.6 million, while its EPS came in at $0.14 over this period.
BKEP is expected to generate 18.8% revenue growth next year. Its EPS is estimated to increase at a 4% rate over the next five years. Over the past year, BKEP's stock has gained 64.9% in price. Furthermore, it has gained 7.8% over the past three months, closing yesterday's trading session at $3.26.
BKEP's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. BKEP has an A grade for Quality and a B for Value. Among the 11 stocks in the A-rated MLPs Other industry, it is ranked #4.
In total, we rate BKEP on eight distinct levels. Beyond what we have stated above, we have also given BKEP grades for Growth, Momentum, Stability, and Sentiment. Get all the BKEP ratings here.
EGY shares rose $0.07 (+2.09%) in premarket trading Thursday. Year-to-date, EGY has gained 93.22%, versus a 29.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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