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Strategies & Market Trends : Picks of the quarter -- Ignore unavailable to you. Want to Upgrade?

To: Elroy who wrote (2790)	4/3/2007 3:31:23 AM
From: tejek	Respond to of 20435

It's ticker is STU. Chart moves up progressively to $2 about last March, then back down to 90 cents today. The point is, is a PE of 4x normal for these stocks? And with reserves of $160 million, does a $42 million market cap make sense? I think there are plenty of pdfs on their website. If you just read the most recent one on reserve uplifts it gives the reseverse as ~2.8 million barrels, and if you look at the 6 month report for Dec '06 they had ~$6 million net income. Sorry, I just got to this post. Its normal for oil stocks particularly drillers to have low PEs especially during the past six months when crude prices were dropping. As a general rule, most commodity stocks have low PE's because their fortunes can change very quickly. I am not sure what you mean by 4xs normal. Is that a PE of 4? If so, that's lower than normal. Most trailing PEs of drillers range from 6-10. As far as Stuart's reserves, you can't take their word at face value. Some oil companies will inflate the amount of their reserves. Finally, I looked at the chart for STU....the sucker hasn't stop falling. Most stocks of US oil drillers are either in the bottoming process or are moving up. It looks like STU is still falling. Of course its important to remember that stocks tend to overdue their moves either to the upside or downside. So maybe STU should have stopped at $1.50 but momentum was strong and it has kept falling. Nonetheless it doesn't look good. It could be there is something very wrong with the company. Do you know any Aussies who are involved in the market there? Maybe you can find a message board for the stock and see what other shareholders are saying. I found these comments about STU in the Aussie section of Yahoo: * Stuart Petroleum Ltd. (ASX: STU.ax) surged 8.6 percent to A$0.885 after it announced a A$6 million ($4.7 million) development programme to boost production at its oil wells. The company also said it expects to produce between 575,000 and 625,000 barrels of oil this year. au.biz.yahoo.com A lot of these small oil companies buy up the oil well castaways of the larger drillers. Then they have to work like hell to pump more oil out of them. There may be concern that STU's wells are finally drying up. Here's the STU press release that says exactly that: stuartpetroleum.com.au Hope this helps.