Going for ASX gold

Olympic fever has caught on at Fool HQ. Not satisfied with the Aussies’ ‘haul’ of one gold medal to date, we’re going in search of our own investing gold.

You鈥檙e reading a free article with opinions that may differ from The Motley Fool鈥檚 Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Olympic fever has caught on at Fool HQ. Not satisfied with the Aussies’ ‘haul’ of one gold medal to date, we’re going in search of our own investing gold.

Yes, we’re seeing value in the precious metal we’ve spent the last 18 months warning readers to avoid like the plague.

Are we off our rockers? Have we succumbed to the sleepless nights watching sporting drama and excellence?

Read on Fools…

MAD world
We haven’t mentioned Maverick Drilling & Exploration in a while.

It seems a few Fool readers were getting a little tired of us mentioning the company.

Fair enough. Perhaps we were a little over-zealous in celebrating our greatest stock picking success story to date…a company that has seen its share price soar from 22 cents to $1.30 to date in 2012, a gain of almost 500%.

High impact Maverick
The MAD story has a long way to run. The company recently raised $50 million to fund their development and exploration program over the next 12 months, and this includes drilling a number of high impact wells “where the positive results of such drilling can impact the Company substantially more than a traditional development well”.

If nothing else, it promises to be an exciting ride. Let us count the ways…

1. Maverick is currently a profitable producer, although it must be noted the average barrels of oil per day (bopd) fell in the quarter to June 2012 as the company reduced its drilling activities.

2. Compared to its current $500 million market capitalisation, Maverick has massive oil reserves, and huge acreage.

3. With its plan to drill over 60 “high impact” wells in the coming 12 months, Maverick has the potential to significantly add to those already impressive reserves.

A line to Texas
As long-time Fool readers will know, we are in contact with Maverick Executive Director Brad Simmons, our line to Texas.

For us, the one niggle hanging over the investment case for Maverick is their production profile.

Reserves are great, and the lifeblood of an oil company, but production puts the dollars in the bank, and in the long-run, companies are ultimately valued on the discounted value of their future cashflows鈥ith apologies for the jargon.

We put this point to Brad last month, asking for comment on Maverick’s production profile over the next 24 months…

Bruce, impossible to say due to the new prospects and their increased prospective impact.

Each of the ‘high impact’ wells we are targeting, albeit with varying layers of additional risk, have the ability to replicate many of our current producers with just the one well.

It comes down to the people driving the bus and whether you believe in their commitment to excellence and making the right decisions and having the experience to keep it on the right track. We have one of the best teams making those decisions that could be assembled for this mission.

Thanks Brad.

It’s the people, stupid
When we invest in companies, we invest in the people running those companies. To date, the seasoned executives at Maverick have not put a foot wrong. In terms of shareholder value, the runs are on the board. And, excitingly so, there are seemingly multiple opportunities to keep growing shareholder value.

Listed investment company Contango MicroCap (ASX: CTN) recently said they expect Maverick to grow production from current levels of below 1000 BOPD to around 2000 by year end, saying they value the company “conservatively at $1.80/share.”

That’s a further 40% upside from here.

We’ll continue to follow the Maverick story, both for the Fool readers who took our advice and bought shares, and for ourselves, as I am a happy and satisfied shareholder, stating the obvious.

The next Maverick
We’re always searching for the next Maverick, the next big winner.

And right now, especially in the beaten-down resources sector, we’re seeing some very interesting opportunities.

We’ve generally avoided the over-heated sector, and certainly have steered well away from high profile yet high-risk investments in companies like Linc Energy (ASX: LNC), Mirabela Nickel (ASX: MBN), Flinders Mines (ASX: FMS) and Aquila Resources (ASX: AQA).

Call us old fashioned, but we don’t care much for losing money…and the four companies mentioned above have each plunged 50% or more in 2012 to date.

Going for gold
But we’re seeing some interesting stocks that have been thrown out with the bathwater. Sure, there’s risk, and some are risker than others.

But with the share prices of some companies being beaten down and forgotten, we’re happy to pick up the pieces, and to hopefully profit.

And, to whet the appetite, and shock the gold bugs we’ve so consistently mocked, we’re even seeing some value in gold…and we’re not just talking Olympic gold medals. Stay tuned, Fools.

Bruce Jackson is the General Manager of The Motley Fool Australia. He owns shares in Maverick Drilling & Exploration. Take Stock聽is The Motley Fool Australia鈥檚聽free聽investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.聽Click here now聽to request聽your free subscription, whilst it鈥檚 still available.聽This article contains general investment advice only (under AFSL 400691).

 

More on 鈴革笍 Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
鈴革笍 Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
鈴革笍 Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more

asx investor daydreaming about US shares
鈴革笍 How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more

person reading news on mobile phone
鈴革笍 Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more