Benzinga reported in early October that a FinTwit personality who goes by the handle @MrZackMorris raised their price target for Camber Energy (NYSEAMERICAN:CEI) stock to $10 in early October.
Since that upgrade, CEI stock has lost 61% of its value.
With all due respect to @MrZackMorris, the Washington Football Team has a better chance of going to the Super Bowl than CEI has getting to double digits.
If you’re contemplating buying the oil and gas penny stock, don’t waste your money or time on this turd. Meme stock or not, it’s the modern-day equivalent of Florida swampland. Here’s why.
There Are Plenty of Options to CEI Stock
In my last article about Camber, I delved into the short report from Kerrisdale Capital. One of the aspects that struck me was the mysterious share count. Kerrisdale says it’s 285 million, not the stated amount of 104.2 million in 8-k from July 8.
However, on Oct. 6, Camber filed an 8-k that said its shares outstanding were 249.56 million.
“The increase in our outstanding shares of common stock from the date of the Company’s February 23, 2021 increase in authorized shares of common stock from 25 million shares to 250 million shares, is primarily due to conversions into common stock by an institutional investor of shares of Series C Convertible Preferred Stock of the Company that were sold to the institutional investor in 2018 and/or 2019,” the 8-k stated.
That puts its market capitalization at $322 million as I write this.
Forget for a moment that the company hasn’t filed a 10-Q since June 2020. In an interesting twist of fate, I inadvertently referred to June 2021 in my Oct. 8 article about the company. Then, even more inadvertently, I said its revenue was $33.7 million during the quarter, 72% lower than a year earlier.
However, the actual revenue was $33,689, down from $121,351 in 2020. It lost $725,909 from its operations, a little more than half what it lost in 2020.
So, I was actually giving Camber way too much credit for its business. It generated less than your typical convenience store.
InvestorPlace’s Joseph Nograles recently discussed the company and its prospects, but, unfortunately, he’s not impressed by any of it. Not its 62% stake in Viking Energy (OTCMKTS:VKIN), the intellectual property for a carbon waste-to-clean energy system, not even Viking Energy’s 2020 revenue of $40.2 million.
“Camber Energy is nothing more than a part-owner of a small OTC oil-and-gas company. I believe CEI stock is not worth the risk,” Nograles stated on Oct. 29.
Camber owns 62% of a company that had interest expenses of $3.2 million in the quarter ended June 30, double its operating profit. Through the first six months of 2021, Viking lost $18.9 million at a time when oil prices haven’t been this high since 2014.
As I said in the intro, the company’s a turd. However, you do have options.
How About SilverBow Resources?
SilverBow Resources (NYSE:SBOW) is a Houston-based oil and gas producer with a market cap of $348 million or about the same as Camber. The Texas independent has 155,000 net acres in the Eagle Ford Shale basin in South Texas.
On Oct. 11, it announced the acquisition of 17,000 net acres in four Texas counties in the Eagle Ford Shale basin for $45 million in cash and $30 million (1.35 million shares) of its stock.
The acquisition boosts its 2021 oil production guidance by 30%. As a result, it expects 2021 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $28 million.
Through the first half of 2021, SilverBow now expects to generate $50 million in free cash flow (FCF) for the entire year at the midpoint of its guidance, 25% higher than in 2020.
Based on that guidance, it has an FCF yield of 14.4%, which puts it solidly in value territory. For the trailing 12 months, SilverBow had revenue of $256 million. That’s good for an FCF margin of almost 20%.
Those are numbers Camber shareholders could only dream of.
Despite gaining 411% year-to-date through Oct. 29, assuming the good news keeps coming, I could see SBOW getting to $50 before the end of 2022.
I can’t say what will happen to CEI stock other than it likely doesn’t have a shot at $10 anytime soon.
There’s no question the savvy investor picks SBOW over CEI every day of the week and twice on Sundays.
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On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.