Low-priced stocks like Camber Energy (NYSEAMERICAN:CEI) can be a bit like a double-edged sword. They can make very rapid moves higher. For example, we saw CEI stock do that twice last year. First in late winter, then in a big way during the fall.
They can also make extreme moves lower. Unfortunately, we’ve seen more of those lately with this oil and gas company that is steadily turning itself into a clean energy play. Since hitting prices topping $4.85 per share on Sep. 29, it’s since fallen to around 77 cents per share. This is a decline of around 84%.
With this big decline, many investors may prefer to stay away from this situation. I can understand this in the case of more risk-averse investors. But investors looking for more high-risk, high-potential return plays might find CEI stock be a worthwhile opportunity.
Especially as a recent pair of financing deals may mean it has a greater chance to turn its ambitious plans into reality. As always, I recommend due diligence on speculative situations like this one. But if you do your homework and come to the same conclusion that there’s high potential here, it may be a green wave play to add to your portfolio.
An Overview of CEI Stock
Up until recently, Camber Energy was one of scores of what are known as independent oil & gas (O&G) exploration and production (E&P) companies. There are many of these in the public markets. Most of them are small caps with low share prices. These types of stocks typically move wildly, mostly on the ebb-and-flow of energy prices.
However, among the scores of names in this space, CEI stock stands out. Why? Because of its decision to go another route. Instead of focusing on its legacy business, it has its eye on the future. It is getting to the future via the acquisition of companies that stand to benefit from the transition to carbon-free energy.
Through its majority-owned subsidiary, Viking Energy (OTCMKTS:VKIN), Camber has been wheeling-and-dealing in recent months. First, with its purchase of a majority stake in Simson-Maxwell Ltd. A Canada-based maker of industrial engines and power generation products, it plans to utilize carbon-capture technology licensed from ESG Clean Energy, repositioning Simson-Maxwell as a provider of clean energy solutions to its existing customers.
Along with this, in December 2021, its Viking unit inked a deal to purchase a renewable diesel production facility located in Reno, Nevada. There’s big potential in the years ahead for renewable diesel, as Federal and State-level agencies look to reduce greenhouse emissions.
Camber and its Recent Financing Deals
Pivoting from oil & gas to clean energy is no small feat. You may be wondering how Camber is going to pull this off. Namely, due to its small size. I’ll admit that there may have previously been the risk that it was going to bite off more than it can chew.
That is, it may be moving into clean energy too quickly without the adequate amount of capital to ensure its plans work out. However, based on some financing deals it has inked in recent weeks, that may be less of an issue now.
First is a $25 million convertible debt deal. Among other things, this transaction provides Camber with the capital needed to pay off an upcoming loan, plus add to its working capital. Second, it provides an even larger capital raise. Third, there is a complex transaction that could provide the company with up to $100 million in financing. This deal, of course, provides an even greater capital infusion for the company.
Having said all this, I’ll admit, as well, that while this capital gives it greater potential to turn its big plans into a big success, there is no guarantee that will happen. If it manages to smartly put this money to work, it could result in creating substantial value for investors in CEI stock. But what if this fails to happen and its green endeavors fizzle out? The company will have a lot of debt and preferred stock obligations and little to show for it. This will undoubtedly result in another big move lower for shares.
The Verdict on CEI Stock
Earning a “B” rating in my Portfolio Grader, there’s no getting around the speculative nature of Camber Energy. If its plans work out, it has a strong chance of getting back to the highs we saw in the fall. If it fails to work out, you can expect another tremendous decline in its share price.
However, with its recent financing deal seeming like a promising sign and as it continues to build its clean energy portfolio, CEI stock remains a green wave play worth considering.
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On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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