Buying these two stocks now could make you a millionaire retiree

Shares in Echo Energy (LSE: ECHO) have been suspended from trading today after the company announced that it was in the process of negotiating a transformational acquisition. 

According to the firm’s press release on the matter, management is currently holding talks over a potential new buy in South America. However, due to the size of the purchase, the transaction would constitute a reverse takeover and as such the company’s shares have been suspended from trading. 

The group’s shares will remain suspended until a new admission document is published and after shareholders have approved the transaction – or the proposed deal is cancelled.

A big deal 

Unfortunately, as of yet, there are no further details on the transaction, but it looks as if this will be a transformational deal for the business. Earlier this month management praised a very active period for company development in the prior weeks and informed shareholders that “we have continued to assess multiple opportunities in the region.”

And unlike the majority of other small oil & gas explorers, Echo is cash rich. The company ended the six-month period to June 30 with £25.5m of cash on the balance sheet after acquiring two exploration blocks in Bolivia. 

Charting a course for success 

Going forward, as with all oil minnows, Echo’s success depends on management’s ability to select the best quality assets and bring production on-stream efficiently and under budget. 

The new management team led by CEO Fiona MacAulay and chairman James Parsons seems highly motivated, and management is certainly not wasting any time expanding the group’s asset base. If the firm continues on this track, I believe that there’s a high chance investors could be well rewarded over the long term. That being said, while Echo could be a multi-bagger, as with all early-stage oil and gas companies, the risks of failure are high. 

A safer buy? 

Echo is a high-risk, high-reward play. If you’re looking for a lower-risk opportunity which still has the potential for outsized gains, the Midwich Group (LSE: MIDW) might be a better buy. 

Midwich is a specialist audio visual, professional video, film, broadcast, lighting and document solutions distributor. A relative newcomer to the public markets, the firm has quickly made a name for itself. Over the past year, the stock is up more than 100%. 

It looks as if these gains could be just the start of the company’s growth. City analysts have pencilled in earnings per share growth of 15% for 2017 and 9% for 2018. If Midwich hits these targets, the company will have more than doubled pre-tax profit in just under two years. 

To help boost growth, management is reinvesting cash generated from operations into acquisitions, a strategy that’s already paying dividends and should continue to yield results. Recent acquisitions have been incorporated into the group with no issues and are already producing results —  a sign that management knows what it’s doing when it comes to deal-making, which bodes well for future expansion plans.