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Proprietary Data Insights Financial Pros Top Oil & Gas Exploration Stock Searches This Month
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This tiny upstart could be gold’s big winner
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You’ve likely never heard of this company. But if gold continues to soar, that won’t be the case for long. Get in now for under $10. |
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Energy |
Is This Small-Cap Oil Play More Than Just A Pump?
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Bubbles are a natural part of market cycles. We saw it happen to meme stocks, housing, and now oil and gas. Recently, a surge in anything related to energy has blown up companies like Houston American Energy Corp (HUSA). A stock that trade at less than $2.00 per share a year ago, price spiked to as high as $16, sending search volume soaring amongst financial pros. This tiny oil and gas exploration company garnered more searches by that group in the last month than Marathon Oil (MRO), a business hundreds of times larger. But make no mistake. HUSA is a garbage stock and garbage company. Typically, we don’t cover these. But given the high level of interest, we felt it necessary to justify our statement.
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HUSA’s Business Houston American Energy Corp (HUSA) is an oil and gas exploration and production company. The firm has four exploration properties in Texas, they include
HUSA has royalty and working interest in three projects in Louisiana. And has three concessions in Columbia. According to its Q1 2022 financial statement, HUSA only had $279,198 in accounts receivable from oil and gas sales. Furthermore, the firm generated $423,820 from oil and gas revenue in Q1 2022. And despite energy prices exploding in 2022, HUSA managed to lose $165,560 in the first three months of the year. However, that isn’t reflected in HUSA’s stock price, which is up more than 280% YTD. Financials HUSA has had erratic revenues over the years and has never been profitable. However, revenue has grown 94% (YoY).
While that might sound impressive, it’s not. HUSA only generated $1.43 million in sales (TTM). To make matters worse, HUSA has -$412,310 in net operating cash flow. Now, the company has no debt with long-term liabilities only accounting for about $477,000. Plus, it has $4.8 million in cash. Yet, at its current burn rate, it’ll be out of money in less than a decade. You might think there could be hidden assets of untapped reserves somewhere. Yet, the balance sheet says otherwise. Valuation HUSA has a price-to-sales ratio of 38.17x, which is absolutely horrendous when compared to blue chip energy stocks like Exxon (XOM), which stands at 1.19x. HUSA does not have a P/E ratio, and the firm has a negative EBIT margin, EBITDA margin, and net income margin. Its return on equity, return on assets, and return on total capital is all negative. On the bright side, it does have a gross profit margin of 56.42%. Our Opinion – 1/10 HUSA has found itself at the right place at the right time. It is in the red-hot energy space, and because it’s so tiny, and has a low float, less than 10 million shares outstanding, it can easily be pushed around. And that’s all we have here. A low float stock getting pumped because it is in the energy sector. There are no real fundamentals behind this company. Insiders don’t even believe in this company, they own less than 10% of the company. While HUSA might get a lot of attention on social media and message boards, it’s really just hype. Once investors see how weak the fundamentals are, we believe shares will sell-off. We think there are better places to park your money in the energy space. |
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