It’s not very often that all of the shares in my 52-week low articles are buying opportunities. Such a thing hasn’t happened since the buying bonanza a few months ago where eight big-name companies all hit 52-week lows.
Today however I’m writing about two junior oil explorers with big potential, and one of last year’s IPOs on sale – as so often happens – for less than its issue price.
Senex Energy Ltd (ASX: SXY) – last traded at $0.635, down 13% in 12 months.
One of the most promising oil/gas producers in the Cooper Basin, South Australia, Senex Energy has trended down to its lowest point in 52 weeks despite outstanding June quarter performance figures and an increase of total 2P (proven + probable) oil reserves of 50% in the past month.
Also the home of Beach Energy Limited (ASX: BPT) and Cooper Energy Ltd. (ASX: COE), the Cooper Basin is home to some of Australia’s best oil and gas opportunities. Despite the potential, many of these companies have seen their shares sold off recently, leaving the shrewd investor with a buying opportunity.
With its current low price and newly improved reserves, is Senex Energy a buy? Absolutely.
Buru Energy Limited (ASX: BRU) – last traded at $0.735, down 60% in 12 months.
Another junior oil producer suffering from a sell-off lately, Buru Energy holds its tenements in the Canning Basin in Western Australia, where its huge exploration permits will last it until at least 2024.
A partnership with several overseas companies including Mitsubishi of Japan provides a market for Buru’s oil, and the recent transition from exploration to production and sales has delivered strong revenue so far this year.
As Buru accelerates its extraction and conducts cost-cutting and internal reorganisation efforts, I expect the company to increase both its revenue and overall profits, making today’s price look quite reasonable.
Ozforex Group Ltd (ASX: OFX) – last traded at $2.28, down 14% in 11 months.
Less than a year out from its IPO, OzForex acts as another example of why it’s not always sensible to buy into IPOs too quickly. Statistically speaking, you’re likely to be able to pick up the IPO’d share at a better price if you wait a while.
This is certainly true with OzForex, with a decrease in profit of 7% on the prior period apparently disappointing investors, despite an overall revenue increase of 40%.
Since the full-year report was released in June, OzForex has trended down even further despite investors being informed in the report that the decrease in profit was due to a number of one-off expenses associated with the IPO and approach to UK company HiFX.
If you’re a believer in OzForex, right now looks like a pretty good time to buy as it’s trading below its IPO price, and profit should return to normal levels this year now that all of the one-off expenses have been dealt with.
That means that 3/3 companies in today’s articles represent solid buying opportunities to investors, who I hope keep a stock of cash to snatch up bargains as and when they appear.
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Motley Fool contributor Sean O'Neill doesn't own shares in any company mentioned. The Motley Fool owns shares in OzForex.