Bullish on this Bear
Kodiak Oil (NYSE:KOG) has long been a favorite of those in the know on independent domestic oil and gas exploration. In many ways the company is a throwback to the good-old wildcatter days.
The problem is that execution has been inconsistent and often disappointing. Still, it’s hard to ignore potential with a presence in two of the hottest areas in the great American oil revival: Williston North Dakota & Montana and Greater Green River Basin Wyoming & Colorado.
The stock is changing hands at a price/earnings ratio of 11 and a P/E-to-growth ratio of 0.38, which makes it very attractive.
The Street expects annual growth of 50% over the next five years, which is huge even in this hot space -- the industry is expected to grow at 15%.
Management is hustling to share the story and will appear all over Wall Street, with September conferences hosted by Barclays (NYSE:BCS), Deutsche Bank (NYSE:DB) and Credit Suisse (NYSE:CS), and October conferences with Johnson Rice and Credit Suisse.
Technically the stock makes a major breakout with a close above $9.25, and from there the next leg up lifts the stock to $10.75. Longer term it has potential to trade even higher.
It can be volatile so a stop at $8 would be smart.
Charles Payne, a FOX Business contributor, is president of Wall Street Strategies. At the time this article was published he, his firm and/or his family did not own securities in Discover Financial.