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Strategies & Market Trends : Dino's Bar & Grill
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To: Goose94 who wrote (51102)10/29/2018 7:53:25 PM
From: Goose94Read Replies (1) of 203260
 
Parex Resources (PXT-T) top pick from Don Lato on BNN.ca Market Call tonite Monday Oct 29th @ 1800ET

After being the best-performing energy stock in Canada this year, Parex’s share price has come under pressure since its July 17 announcement it’s examining the sale of their development properties in Colombia and a return to their roots as an exploration company. The initial weakness was exacerbated by the company’s last earnings release in early August, with the news it abandoned two wildcat wells. This news accompanied an otherwise solid second quarter earnings release that included guidance for an increase in overall production this year.

Following that earnings release, Parex announced two additional exploration successes, which were well received for a very short time. The stock, however, was again driven down with the overall market decline. Nonetheless, investors have clearly overreacted to this combination of news and are overlooking the tremendous cash flow (estimated at $5.77 per share for 2020) that Parex continues to generate. The company should be of great interest to a variety of potential acquirers.

My overall investment view is that stocks are generally priced rationally, but have periods of irrationality that must be taken advantage of. The current irrationality around Parex, now trading at a price to cash flow multiple of 3.4 times 2020 cash flow, is presenting a tremendous buying opportunity that must be acted upon.
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