When a stock goes from about $4.50 to almost $13 in the space of a
year, and analyst price targets have more than doubled in the trailing
six months, something pretty dramatic is going on. That seems like a
fair summary of Penn Virginia (PVA)
as this once gas-heavy small-cap E&P has transitioned to an
oil-oriented company with exceptional real estate in the Eagle Ford.
It's
not all Beverly Hillbillies yet, though. As the last couple of quarters
have shown, hitting production and earnings targets is still a
challenge. The company also has a significant amount of debt on the
balance sheet and ambitious spending goals for 2014 and beyond. I do
believe that further drilling in the Eagle Ford can unlock significant
value from here, but investors have to be able to withstand the
quarter-to-quarter turbulence that will accompany this name.
Read more here:
Penn Virginia Offers Near-Term Risk, But Long-Term Reward
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