SDX Energy (SDX-V) top pick from Josef Schachter on BNN.ca Market Call Monday June 18th @ 1200ET
SDX is getting ready to bring on natural gas volumes in Morocco and Egypt in the next two or three quarters, which will double production levels into year-end 2018. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose sharply in Q1/18 to US$7.4 million from US$1.6 million in Q1/17. Volumes in Q1/18 were 3,036 boe/d and should rise to over 7,500 boe/d in Q4/18 and an exit number that could reach more than 7,500 boe/d. SDX has no debt, and cash at the end of Q1 was US$29.3 million. Removing cash, SDX trades at only 3.5 times 2018 cash flow. This is a very cheap stock. The stock is on our Action Alert BUY list and we’re investors in this company. We’ve a one-year target of $2 per share for SDX upon reasonable upcoming drilling success and meeting their exit volume target. Our bull market target is $5 per share. We recommended the stock in 2016 when it was at $0.30 per share, again in 2017 when it was at $0.80 and now at $1.09. The reason for the repeat recommendation is that production has gone from 1,200 boe/d in early 2016 to 3,036 boe/d in Q1/18 and to an expected exit rate this year of more than 7,500 boe/d. Their success with the drill bit is the reason for the volume gains. |
