Energy Stocks Under $10 to Buy Now: EXCO Resources (XCO)
Natural gas producer EXCO Resources (XCO) is one of the best cheap stocks under $10 because it’s been attracting all the right kind of attention. Namely, several big-time value investors including billionaires Wilbur Ross and Prem Watsa have loaded up on XCO stock.
The reason? The low share price of EXCO Resources doesn’t adequately reflect the real value of the natural gas it has in the ground.
Like most small-cap energy stocks, XCO is asset-rich, yet very cash-poor. EXCO Resources features strong shale assets in the Permian Basin, north Louisiana and across Appalachia. The bulk of those assets are natural gas producing and about 95% of XCO production is dry gas. With its high debt load and the relatively low price for natural gas, EXCO Resources has had trouble getting those assets out of the ground.
Sensing an opportunity, value hounds have been scooping up shares of XCO stock … perhaps in order to take the company private. In fact, this isn’t the first time EXCO Resources has attracted value investors’ attention. Back in 2010, former CEO Douglas Miller tried to take XCO private at $20.50 a share. Those efforts failed and natural gas began its fall downward.
But now that XCO is one of the cheapest energy stocks at just $5 a share, Ross and Watsa might just succeed and take it private. In fact, they already own about 15% of the company. For investors, this might be one of the quickest plays on cheap energy stocks there is.