Combined legacy oil and natural gas assets with custom energy and power solutions for commercial and industrial clients, Camber Energy (NYSEAMERICAN:CEI) has always been a relevant business. However, it’s inability to consistently generate positive net income has long caused CEI stock grief – except for those moments of course when it attracted meme-like attention.
But today, the paradigm surrounding Camber Energy has shifted dramatically. Therefore, no matter what your thoughts were about CEI stock pre-Ukraine invasion by Russia, it’s worth reexamining the narrative again. After all, nothing gets the equities sector moving like open warfare in the heart of Europe.
To be sure, CEI stock – after suffering through a series of volatile sessions – is finally looking interesting again. On a year-to-date basis through the close of the March 9 session, Camber Energy shares are up 25%. But that’s not the whole story. In the trailing month, the security is up a whopping 98%.
Still, the environment isn’t completely conducive for bullish speculators. On the March 9 session, CEI stock tanked almost 14%. While such a performance seems ridiculous amid gasoline prices that are reaching close to $7 or more in certain parts of the country, major oil indices slipped substantially “amid indications of possible progress by the U.S. in encouraging more oil production from other sources,” per CNBC.
In other words, CEI stock may appear to be a no-brainer due to its legacy oil and gas exposure. But anything and everything can happen in the new normal, warranting caution.
That said, our own Louis Navellier is warm to the idea of Camber Energy because of its potentially green profile. Is the long-term case for CEI finally going to make good for investors?
The Enticing, But Also Vexing Nature of CEI Stock
On the optimistic front for CEI stock, I can totally see where my esteemed colleague is coming from. As he put it, the “potential for Camber to make a successful move into the clean/renewable energy space” is its main long-term catalyst.
As Navellier succinctly described, Camber’s “green wave” portfolio consists of two businesses held through its majority ownership of Viking Energy Group (OTCMKTS:VKIN). First, CEI utilizes carbon capture technology it licensed from a third party, with intentions to market this mechanism to its legacy clients.
Second, Camber is moving into the renewable diesel industry, buying a mostly completed sector plant in Reno, Nevada. “Once operational, this plant will be able to produce up to 43 million gallons per year. Demand for this alternative energy source has been going up, as businesses look to reduce their carbon footprints.”
On the surface, then, circumstances look quite enticing for CEI stock. If the Russian invasion of Ukraine taught us anything, it’s that we need to accelerate investments into alternative energy sources. However, Camber’s ventures do not represent readymade solutions devoid of challenges.
On the contrary, Camber may have viability issues. Regarding carbon capture, one of the problems is that historically, these mechanisms have “have underperformed and failed to hit carbon storage estimations,” according to The Climate Connection. Also, investments in this space can compete with investments in actual renewable energy projects.
For renewable diesel, the main impediment to its integration is cost, with renewable diesel being pricier than conventional diesel – a no-no when consumers were already struggling with inflation prior to the geopolitical flashpoint.
As well, renewable diesel is controversial because certain processes to make the fuel may result in deforestation and destruction of natural habitats. Politically, that wouldn’t go over too well these days.
Start Your Homework
Naturally, I can appreciate why people are abuzz about CEI stock. Nearly doubling in a month will get the juices flowing big time. As well, a fundamental narrative supports the bullish thesis. It’s cynical but the crisis in eastern Europe threatens to shrink available energy supplies.
That’s a recipe for sharply rising prices.
Still, banking on the direction of commodities is a dangerous game for even the most seasoned traders. Further, Camber Energy’s green profile is attractive but also features underlying challenges that will most likely not be easy to resolve.
I’m not saying short it by any means. However, if you’re going to take a heavy position in CEI stock, you should do your homework first.
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.
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