Skip to main navigation or content
You are here:
Last week, we reported that only four stocks had managed to climb more than 15 per cent over the prior month. In contrast, this week 30 stocks have reached this hurdle in the past five trading days alone, many of them bouncing back from heavily oversold positions.
Advertising
By far the most popular sector is oil and gas explorers, which are benefiting from the expectation that Opec will cut production quotas at its emergency meeting this week, stemming the precipitous slide in the oil price. That's important, because crude prices are the basis for the discounted cash flow methodology used by analysts to value exploration and production companies.
But there's more to it than that. Look at the big gainers in the small-cap oil sector, and a common theme emerges. Stocks like Gulf Keystone, Volga Gas, Rift Oil, Falkland Oil & Gas and Gold Oil have climbed at least 25 per cent lately - and all of them are adequately financed, at or close to production, or involved in possible industry consolidation.
Another issue is that these are all companies small enough for exploration success to be meaningful. "A reasonable find can be completely transformational for these small companies, which obviously isn't the case with a company like Exxon," says Paul Mumford, fund manager at Cavendish Asset Management, who points out that at current prices, investors could see a five-fold return on their investment if a company strikes it lucky.
That's never going to be the case at oil giants such as BP (a recent buy tip), whose exploration successes merely replenishes reserves they have already extracted.
Bouncing back
| Company | Price p | 5-day price chng % | 12M price chng % |
|---|---|---|---|
| Urals Energy | 16 | 125% | -94% |
| YouGov | 74 | 67% | -61% |
| IFR Capital | 0.125 | 56% | -85% |
| Titan Europe | 30 | 55% | -86% |
| Queen's Walk | 2.3 cents | 53% | -57% |
| Panmure Gordon | 32 | 49% | -77% |
| Nufcor Uranium | 93.75 | 35% | -65% |
| Gulf Keystone | 18.5 | 35% | -55% |
| Volga Gas | 114 | 33% | -62% |
More recovery stories
Another sector where a consolidation theme is at play is stock broking - just look at Panmure Gordon, whose share price climbed close to 50 per cent in one week. There has been widespread speculation that it will merge with Arden Partners, although the latter’s stock price has failed to show any reaction.
This may be premature, though. In the last bear market in 2003, shares in brokers like Charles Stanley and Brewin Dolphin were trading below their net asset valuation by the time the market bottomed out, and so were effectively being given away. The industry cycle of cost-cutting has yet to run its full distaince, so betting on broking consolidation isn't a game we would advise investors to play just yet.
A company that might be climbing off the scrap heap, earnings-wise, is online market researcher YouGov, whose shares climbed 27 per cent after its recent results. Even after the climb they have fallen 61 per cent in the past 12 months. Investors are betting that the revenue growth the company is achieving in markets such as Germany, US and Scandinavia after making three acquisitions last year, will continue. We are not so confident, and believe that even though it's trading on an undemanding PE ratio of 8 times, and much investment is still needed to support its growth plans.
MOVERS & SHAKERS is a regular online column devoted to seeking out shares with genuine underlying price momentum, not just those that are zipping up and down every day.
You can view shares making new lows and highs, along with a host of other metrics, at our MARKETS CONSOLE. For more sophisticated searches, you can use our STOCK SCREENING TOOL - although you'll have to register (it's free) first.
If there are any shares you think we should be keepng an eye on, LET US KNOW via the Your Opinion page!
The only way to access our daily share tips, analysis and profit making tools is with an IC Advantage subscription which starts from just £12.50 per month. Purchase yours here.
Subscribe to IC Advantage today, access starts from just £12.50
Use the links below to find key market data and portfolio functionality. Registration (free) may be required for some services.
© The Financial Times Limited 2009. All rights reserved. "Investors Chronicle", "FT" and "Financial Times" are trademarks of The Financial Times Limited. No part of these web pages may be reproduced or transmitted to or stored in any other website or other form of electronic retrieval system, without prior permission in writing from the editor.
Warning: Do remember, particularly if you are new to stock market investment that the prices of shares and other investments can fall sharply. You may not get back the money you originally invested. The material here is for general information only and is not intended to be relied upon for individual investment decisions. Take independent advice before making such decisions. This site is aimed at UK residents only. To read more please see our Important Warning
-IC-1.9.0c-prod - 15/05/2009 11:00:33 - stuart.turner
