The war in Iran has created market volatility and spiking oil prices. While war is always a tragedy, there is nothing much we can do as individual investors except to accept reality and invest based on the cards we are dealt. Last week we were bullish on Monumental Energy Corp. (MNRG.V) (MNMRF) and Perimeter Medical Imaging AI, Inc. (PINK.V) (PYNKF). MNRG hit our $0.15 target but PINK has stayed about flat in the low $0.50's as the market is overlooking biotech stories. Both remain compelling investments but today we are going to focus on five must-own stocks as oil continues to skyrocket on Wednesday evening headed into Thursday morning. Along with oil, hydrogen plays have been hot as spiking oil prices have made renewables and clean energy alternatives relatively more attractive. If you like our picks you can also follow this blog by clicking the follow button on the top of the left hand panel. We have 127 followers so far on here as well as 1,039 followers on our ValueTrades blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.
Stock #1: Black Gold Exploration Corp. (BGX.CN): BGX tops our list because it makes no sense for it to be this cheap given spiking oil prices and that it is a minority holder in a recently producing well. At $0.12, it has just over a $2 million market cap with 17 million shares outstanding. It has a valuation similar to a shell. That would have made sense a few weeks ago when WTI Crude was in the $60's, but not when it is flirting with $100. Last June the company became a producer with the Fritz 2-30 Well coming online. It has a 10% interest in this well and it is located in the Illinois basin, ideally positioned to take advantage of the desire of the United States to boost domestic energy production. Looking at a chart where the 52-week high is $2.80, one can clearly see the upside potential here with a prolonged spike in oil prices. We think a reasonable near term expectation on this stock is $0.25 to $0.50, which would value the company at merely $4 million to $9 million. Easy to see why this one is our #1 choice.
Stock #2: New Zealand Energy Corp. (NZ.V) (NZERF): MNRG rose from $0.04 to as high as $0.16 after successful initial production from an oil well in New Zealand. NZ is a 50% owner of that well, and has gone under-the-radar, even after announcing the discovery itself on Monday. The well has stabilized at 120 barrels per day. Work has already begun at the next well, so shareholders can expect more news from NZ and MNRG. We think the combination of good initial production results and a rising oil price will result in NZ achieving new 52-week highs shortly, with a stock price above $0.50. The stock is seldom traded so just a little bit of buying can really make it run.
Stock #3: Charbone Hydrogen Corporation (CH.V)(CHHYF): Macro events impacting the hydrogen space plus the performance of Quebec Innovative Materials Corp. (QIMC.CN) has really caused junior hydrogen plays to take off. One that is relatively overlooked and still cheap is CH. The stock rose a respectable 21% on Wednesday, but at $0.15 it still sits well below its 52-week high of over $0.40. The stock rocketed from $0.16 to $0.43 in a few days in early December, buoyed by hype around its first commercial production of clean Ultra High Purity hydrogen. The company has since announced sales of its UHP hydrogen in Ontario. Given how QIMC has broken towards new highs and is nearing a $300 million market cap, CH - a commercial producer - at $33 million market cap is a complete steal. This one should easily be able to re-challenge those previously made highs as long as the hydrogen market stays hot. EDIT: On Thursday morning the company announced the development of a supply hub in the Maritimes.
Stock #4: First Atlas Resources Corp. (HHE.CN)(BTKRF): HHE is another QIMC sympathy play that broke out to new highs on Wednesday, up 37% to $0.24. It has a $28 million market cap, about 1/10th of QIMC. It has land surrounding QIMC's acreage so further discoveries - especially those close to HHE borders - will continue to lift this stock.
Stock #5: Indonesia Energy Corporation Limited (INDO): This is a U.S. listing that is well known to move wildly with spikes in oil prices. It is a sympathy play and laggard to Battalion Oil Corporation (BATL), which has spiked to over $20 in overnight trading. A month ago these two stocks were trading at similar market caps. Now BATL is up to $320 million while INDO is stuck at around $70 million. We think that it's only a matter of time before INDO gets hot and closes that gap in valuation.
Disclosure: We are long PINK.V, BGX.CN, NZ.V, CH.V, HHE.CN, INDO
