Here is the video summary of the July 17th INK Morning report where we suggest that a break-out in Canadian financials may be what is needed to signal better days ahead for small-cap oil & gas names.
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Script:
Despite improving Canadian oil prices since last fall, many small oil & gas stocks have continued to slide even as larger names have rebounded. Central-Alberta focused Yangarra Resources (YGR) is an example. The share price is down 68% over the past 12 months and is now in over sold territory. But could it still get cheaper?
The slide comes despite trailing 12-month earnings per share rising 93% as of Q1.
But, investors appear skeptical that the growth can continue, pushing down the stock's trailing 12-month P/E multiple to 4.2. This negative sentiment prevails despite management's Q1 guidance that 2019 production should increase at least 38% compared to last year.
Throughout it all, insiders have been buying. As a group, five insiders have spent $3 million buying shares in the public market over the past year.
Weakness among small cap oil & gas names could continue until investors start to gain greater conviction towards global growth.
A break-out of Canadian financial stocks could signal better days ahead for the global economy and ultimately the economy-sensitive oil patch stocks. Given the value offered by small caps such as Yangarra, contrarian investors will want to watch for a potential upturn in the Financials.
Our report which is not a recommendation to buy or sell securities is available through INKResearch.com or via the Canadian Insider Club. Good luck friends and thanks for listening!
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