Four Junior Oil Stocks: 3 Buys, 1 Hold

Article Excerpt

Most junior oil and gas stocks are now trading near their lows for the year on investor worries that oil and natural gas prices will remain low, or even drop further. Oil now trades at around $61 U.S. a barrel, down from the record high of over $78 that it reached in July this year. Still, global demand for oil continues to rise. We think oil could fall as low as $50 next year. But over the next few years it could stay in a $40 to $80 range. Natural gas prices might follow a similar pattern, but with occasional periods of high volatility. It’s always difficult to find high-quality juniors trading at low price/cash flow multiples. Nevertheless, two of our recommendations, Endev and Grand Petroleum are now trading at less that 4 times cash flow. Oilexco is not yet generating cash flow, but it has considerable promise. Compton will likely increase production and cash flow over the next year, so it’s worth…

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