Callon Petroleum: Gamble in Oil and Gas segment stock

When the economy is going well, it is not easy to invest in oil and gas industry stocks. These tough times with Covid-19 are making it very tough for the companies to face the existential threat. Many companies have become bankrupt due to the pandemic. Callon Petroleum (CPE) is drawing the attention of the investors, despite such tough times faced by the oil and gas industry.

CPE stock has become very popular among Robinhood investors. Only 4000 accounts were holding this stock in March but at present, about 19 times more investors are looking to become the owners of CPE stocks. At the beginning of the month, the number of people seeking for the stocks was 100K.

Callon Petroleum is a risky stock and if you are ready to gamble, it would be the right stock for you. You need to understand that it would be susceptible to losses if Covid-19 keeps on crashing the market but if the things become stabilized, oil and gas stocks might go up.

Callon has invested in shale production which is the most expensive way to extract oils. The production is shut down for a while and the company is working to get revenues through debts. The total long-term debt of CPE has reached $3.2 billion. Investors need to know about the company and its credit ratings before making a choice. The company is left with $500 M for drawing down.

Demand and Supply Ratio

The whole market with Covid-19 has changed its trends. There are big challenges for oil and gas stocks. There are fewer chances of improvements and there is no actual hope for meaningful demand. Cruise ships, airlines, and other big businesses were closed and now, would resume at a lower level. The personal politics of the countries would be apart, there would be a lot changed in the world after Covid-19 goes off from our lives.

The grim picture of the stocks is not progressive but a realistic one. Oil stocks are just gambling and it would be similar to bet on any sports association. Hence, it is advisable to choose any other stock than just CPE to put on your money. The stock is at $1.25 value at present which is thrice the value it had when the market crash occurred in March (CPE stock price $0.42)

Callon Petroleum Company might be undervalued as per the valuation metrics. The growth score of CPE has gone low and the financial prospects of the stock are also not highly valued at the moment. CPE is expected to grow with the ongoing trends if the markets move on the right track well.

About Travis Garlick 1821 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.