I bought Camber Energy (NYSE:CEI) stock primarily as a hedge against tremendous, further gains in oil prices. But, as multiple commentators, including myself, have pointed out in the past, CEI stock does have a number of other strong, potential, positive catalysts.
Also, importantly, a relatively large investment in Camber by an unnamed “institutional investor” has made me more confident in the outlook of the company and its shares. On the other hand, the stock is very volatile and carries a significant amount of risk.
As a result of all of these points, I recommend that risk-tolerant investors and those looking for a way to profit from and/or hedge against further oil prices surges buy a small amount of CEI stock.
An Oil Hedge and Other, Positive Catalysts
Since Russia invaded Ukraine, when oil prices rise, CEI stock soars. For example, on April 12, West Texas Intermediate crude was trading at $96 per barrel. This morning, it was changing hands for nearly $109 per barrel.
During the same period, Camber jumped about 30%, rallying from 76 cents on April 12 to about 99 cents today. It’s true that Camber also plummets when oil prices fall. But for those looking for a way to hedge their entire portfolios against rocketing oil prices, it would be difficult to find a better candidate than Camber.
But as renowned InvestorPlace columnist Louis Navellier recently pointed out, Camber is also developing “carbon capture technology,” “renewable diesel,” and a system that can quickly locate power line outages, all of which could become quite lucrative. And I noted in a Oct. 22 column Camber’s carbon capture technology could enable it to get funds from the Federal government.
A Huge Investment and the Riskiness of CEI Stock
On Jan. 6, Camber reported that an “institutional investor” had agreed to buy $100 million of preferred stock from Camber. The company did not divulge the name of the investor. The preferred shares can be converted into common stock.
Considering that the market capitalization of CEI stock us just $364 million, $100 million represents a very large investment in the company. Nor is $100 million exactly pocket change for even the largest institutions. Consequently, I believe that the institutional investor, after carefully reviewing Camber, has a great deal of confidence in its outlook. After drawing that conclusion, I became much more confident in CEI stock.
On the other hand, Camber is rather risky. The shares are extremely volatile. And, as InvestorPlace columnist Mark Hake has warned, the company has not yet released its 2021 financial results, has not disclosed how many of its “shares are outstanding,” and has made multiple acquisitions. What’s more, Camber has “disclosed that its previous financial statements regarding its investment in Viking Energy should not be relied upon,” Hake reported.
So Camber is significantly more risky than the average stock. Basically, it’s a good name for those looking to hedge against oil price jumps in the short-and-medium term. CEI stock is also a good fit for speculators seeking a penny stock that has a good chance of rallying tremendously.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Larry Ramer held a long position in Camber Energy. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
