3 Oil Penny Stocks to Watch going into September

Oil Penny Stocks

3 Oil Penny Stocks to Watch going into September

Torchlight Energy Resources Inc. Cactus Inc.. And Capstone Turbine. These are 3 of the oil penny stocks to watch. 

Background

In early 2018, there was a rise in prices of crude oil. Consequently, oil stocks also had a good run at the start of the year, only to fall towards the end coinciding with struggling oil prices. However, notwithstanding the swinging nature of the oil industry, as long as the world economy grows so will it. 

Hence, with the expected increase in energy demand over the next years, especially in the emerging economies, the world’s oil and gas industry should also expand. While efforts are being made to increase renewable energy production, demand for oil and similar energy products should still be on a consistent rise. After all, oil remains the fuel of the world.

To get into this industry, penny stocks, as a result of their low costs and potential for high returns, are advisable. However, as an investor, you should be very careful in dealing in them as they are fraught with risk. Nevertheless, here are 3 of the top oil penny stocks that have done considerably well so far, and might be poised for even much better performance. 

Torchlight Energy Resources (Nasdaq: TRCH)

Torchlight Energy Resources (Nasdaq: TRCH) might be voted as the oil penny stock of the year. The high-growth Texas-based oil exploration company has gained over 70% in 2019 alone, just marginally underperforming the S&P 500. 

Despite operating in an industry ranked as one of the worst performers of 2018, Torchlight was able to successfully use its focus on the acquisition of domestic oil fields with high margin to cushion the effects of the storms.

However, there are concerns. Torchlight’s debt profile has been surging, with the company increasing its debt load by over 100% over the last financial year. In fact, presently, it has a debt-equity ratio of over 0.7, qualifying it as a highly leveraged enterprise. 

Hence, for aspiring investors, the high debt profile of the company might be worrisome, and rightly so. However, emphasis should be on its overall balance sheet profile and business prospect to determine if it can survive any possible industry slump.

 ©TradingView. August 6, 2019.

As of August 6, 2019, Torchlight has a market capitalisation of approximately $104 million, with a 52-week share price range of $0.53 to $1.98.

Catcus INC (NYSE: WHD)

Cactus Inc. is one of the largest providers of technological innovative solutions to the oil industry. 

The company has announced its plans to achieve a $1 billion increase in its EBITDA by the end of the 2019 full financial year. To this end, it has developed numerous initiatives to transform its operations and strategies for business, which should enable it to put its free cash flow and proceeds from asset sales to good use. 

©TradingView. August 6, 2019.

As of August 6, 2019, Weatherford has a market capitalisation of approximately $2.1 billion, with its shares trading around the $27 mark. The 52-week range is $24.60 to $40.97.

Capstone Turbine (Nasdaq: CPST)

Capstone Turbine is a leading manufacturer of gas turbines headquartered in Los Angeles, California. The company has been focused on lessening its costs and expanding its supply base to boost revenue. Since, it has accomplished the consolidation of its headquarters and manufacturing facilities. 

©TradingView. August 6, 2019.

Capstone Turbine has a market capitalisation of approximately $51 million. Also, its shares currently trade around $0.71 and have a 52-week range of $0.55 to $1.46.

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