On the surface, oil and natural gas plays like Camber Energy (NYSEAMERICAN:CEI) should be killing it. Before I get grilled, on a year-to-date basis, CEI stock is doing just fine, up 31%. But over the trailing month, shares have hemorrhaged almost 30%, which should inspire serious questions.
After all, we’re probably headed toward a very cold winter. That’s not based on my anecdotal observation but rather the assessment of The Old Farmer’s Almanac. For the 2021-2022 winter weather forecast, it estimates that the “coming winter could well be one of the longest and coldest that we’ve seen in years.” In anticipation, CEI stock should be jumping higher.
Let’s be fair, though. While Almanac claims incredible accuracy, CNN did some checking to find that you should approach its forecasts with some skepticism. According to Dave Hennen, senior meteorologist and executive producer for CNN Weather, “It’s difficult enough to do a five-day forecast.” Therefore, predicting events so far out in the future is of questionable validity.
But even if the weather doesn’t turn out to be as frigid as some fear, CEI stock has another catalyst to bank on. As you know, the novel coronavirus pandemic has imposed a series of global supply chain disruptions, dramatically affecting the price of virtually everything of value. Further, a mixture of high demand and shortages in the energy market has lifted gasoline prices.
On a wider scale, that’s problematic for the broader economy as it could discourage spending and send us into recession. However, it’s got to feel good if you’re an energy executive. Yeah, folks want to go electric but for now, combustion cars dominate.
But the lack of fire from Camber Energy – outside of meme-driven activities – should give most investors pause.
CEI Stock Is Too Fundamentally Flawed to Ignore
My InvestorPlace colleague Chris Markoch really nailed the case for CEI stock in my humble opinion. In early July of this year, he listed Camber Energy as one of the penny stocks to buy. Shares were trading around 58 cents back then. By the end of September, CEI closed a few cents shy of $4.
That’s a 6x-plus return in the space of a few short months. Not a bad way to make a living if you can reliably predict such upside.
Of course, doing that is always a difficult prospect with something like CEI stock. More importantly, you’ve got to know when to call it quits, which is extraordinarily difficult in the heat of the moment. I used to invest heavily in cryptocurrencies, so I would know perfectly well.
Shares quickly tumbled, which led Markoch to reflect on the wild ride. “As I see it, the primary investors in Camber are not particularly interested in the fundamentals.” Perfect. I couldn’t have said it any better myself.
But as he pointed out, you have to pay attention to the fundamentals. If they did, “they might be concerned that the company has been late in delivering its SEC filings.” Ya think? Markoch further brought us some much-needed sobriety:
They could be bothered by a delisting notice the company received in May. Or, they might raise an eyebrow at how the price of CEI stock is being affected by a single tweet from a popular member of the Twitter (NYSE:TWTR) “FinTwit” community.
Indeed, the late deliveries of vital disclosures points to a broader problem, one for which Camber is being sued. Basically, one of the allegations is that through delay tactics, management was able to present a much rosier image of itself, which was later proven false once the disclosures saw the light of day.
Trade at Your Own Risk
Frankly, I would defer to Markoch and my other InvestorPlace colleagues who have dissected CEI stock every which way to Sunday. From what I can tell, the general consensus is that with Camber, you’re betting on the power of the internet.
Now, I’m not naive. Well, maybe I am but not about CEI stock and coordinated trading through social media. It’s a powerful force, one that forced Wall Street big wigs to pay attention. At the same time, it’s not an easy way to make money, far from it.
I’ll concede that the phenomenon of accelerated retail investing sentiment makes CEI stock an extremely dangerous short candidate. I would go nowhere near the bearish position here. However, you’re not going to see me buy this troubled name.
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Read More: Penny Stocks — How to Profit Without Gettting Scammed
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
