Genel Energy
Shares in Genel Energy (LSE: GENL) have been hit hard in recent days as the Iraq-focused exploration company reported a loss in its full-year results for 2014. In fact, despite production and revenue gains, impairments and depreciation costs caused its bottom line to move to a loss of $312m. That’s disappointing, since Genel Energy had managed to report back-to-back years of profit prior to this and, looking ahead, its capital expenditure budget has been cut by 70% as CEO Tony Hayward is focused on the financial standing of the business.
That seems to be a prudent move, since Genel Energy needs to plan for a period of depressed oil prices. And, while investor sentiment may be somewhat weak at the moment, it could rise over the next couple of years because Genel Energy’s forecasts are very upbeat. For example, it trades on a price to earnings growth (PEG) ratio of just 0.3. This indicates that growth is on offer at a very reasonable price and, when combined with Genel Energy’s focus on its finances, could see it perform well in the long run.
Monitise
Monitise (LSE: MONI) is an incredibly difficult stock to understand. On the one hand, it has exposure to an extremely fast-growing part of the banking world: mobile payments, and has established relationships with major blue-chip companies such as IBM, Visa and MasterCard. However, on the other hand, it seems to be no closer to generating a profit and its future strategy appears to be somewhat lacking.
Due to this, investor sentiment has steadily weakened so that Monitise now trades at just 25% of its 2014 high of 80p per share. Looking ahead, it is difficult to see how the company can provide investors with much cheer over the next couple of years, with Monitise not expected to make a pretax profit in either of the next two years, it being open to asset sales, as well as cash burn that could lead to further capital raisings being necessary.
As such, it seems best to wait for positive news flow rather than buy ahead of it, since Monitise could continue to disappoint during the rest of the year.
LGO Energy
Although LGO Energy (LSE: LGO) remains a relatively high-risk company, it continues to have a sound strategy that could see its share price continue the run that has seen it treble in the last year. In fact, the company’s recent capital raising shows that investor sentiment remains buoyant and, over the medium to long term, it could become a highly profitable entity.
Certainly, its future progress will not continue unchecked and this means that investors should be prepared for considerable volatility. However, with its Goudron field in Trinidad now surpassing its target of 2,000 bopd and the company having the financial firepower to develop it further, it could prove to be a rewarding long-term investment. Certainly, a continued low oil price will not be of great assistance to its future performance but, even so, it could be a strong performer relative to its small-cap peers.