Pat McKeough responds to many personal questions on specific stocks and other investing topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions.
This week, two junior commodity stocks were the subject of a question from one of our Inner Circle members: one is a drilling company with interests in North America, Panama and Albania; and the other is involved in oil exploration in Africa.
Q: Hi Pat: Because of you and your team’s advice, my portfolio has actually shown a gain in the three years of this turbulent market. In some cases I’m up 600%!
I would like your opinion on Africa Oil and Cabo Drilling. As always, your pearls of wisdom are very insightful and greatly appreciated. You are the standard by which the competition is judged! Cheers and thank you.
A: Africa Oil, (symbol AOI on Toronto; www.africaoilcorp.com), is a Canadian oil and gas exploration company with interests in properties in Kenya, Ethiopia, Somalia and Mali.
Africa Oil’s east African properties are in the same geological formation as the Albertine Graben, where two U.K.-based firms, Heritage Oil and Tullow Oil, made major discoveries in neighbouring Uganda.
In addition, Tullow Oil has a joint venture with Africa Oil to develop some of its properties in Kenya and Ethiopia. Tullow Oil is the leading independent oil producer in Africa, with two major projects in Ghana and Uganda. The company also has assets in Europe, southern Asia and South America.
Africa Oil’s partnership with Tullow Oil and its high cash balance give it speculative appeal, but it operates in countries with very high political risk. As well, it is in the very early stages of exploration.
As a member of my Inner Circle, you will get individual answers to your personal investment questions. And you will see my answers to questions other investors like you are asking. In fact, you will get virtually all the investment advice I have to give. You will have access to all of our advisories – The Successful Investor, Wall Street Stock Forecaster, Stock Pickers Digest and Canadian Wealth Advisor – and full access to the members-only, password-protected Inner Circle section of The Successful Investor Network website.
Although my team carefully researches all the stocks that members ask about, I personally review each and every recommendation. To ensure this close personal attention, only a limited number of members can be admitted to our Inner Circle. Under the pressure of world events, even more investors are asking for my personal investment advice. We are nearing our membership limit already. Click here to secure your membership in the Inner Circle right away.
Commodity stocks: Cabo drills for major clients like Teck and Goldcorp
Cabo Drilling, (symbol CBE on Toronto www.cabo.ca), is a B.C.-based company that provides mining and specialty drilling services through divisions in Canada, the U.S., Panama and Albania.
Right now, Cabo has 100 drilling rigs in operation. Clients include Teck Resources and Goldcorp.
In the three months ended September 30, 2011, Cabo’s revenue rose 64.5%, to $16.9 million from $10.3 million a year earlier. It earned $0.02 a share, compared to nil per share in the year-ago quarter.
Cabo Drilling continues to win new contracts, particularly a deal with Goldcorp, but its high debt adds a lot of risk.
In the latest Inner Circle Q&A, Pat looks at the prospects—and risks—of both Cabo Drilling and Africa Oil as investments. He then sums up with his clear buy-hold-sell advice on both stocks.
Inner Circle members see Pat’s analysis and recommendations on the stocks that other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this unique investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.
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