Oil has surged in recent months, putting oil stocks back in the spotlight. One such stock to watch is Battalion Oil (BATL), which is priced under $10. Gas prices have risen by about 28% since early July, creating investment opportunities in companies like BATL. With West Texas Intermediate (WTI) at $90 a barrel, BATL is poised to outperform.
BATL stands to benefit not only from the increase in oil prices but also from its cost reduction efforts. The company has already reduced its corporate office workforce by 44% and aims to cut total general and administrative costs by 40% in 2023 through staff reductions and other cost-saving measures. Currently, BATL trades at a low earnings multiple of 0.9x and a projected earnings multiple of 3.7x. Its price-to-sales ratio is 0.45x, and its price-to-book ratio is less than 2x.
BATL has recently invested in acid gas injection projects, which are expected to save the company $2.5 million per month in processing costs. With operating margins at 42% and a return on equity of 25%, rising oil prices should further enhance these impressive figures. BATL ranks above 90% of companies in our database for value.
Gas prices are unlikely to see relief in the near future, and there are catalysts, such as the refilling of strategic oil reserves, that suggest stable or higher oil prices. These factors should continue to support BATL, which has dropped from its 2022 highs of around $20 to its current price of just under $6.
If you're interested in BATL, you may also want to check out our special report featuring three low-priced companies with significant upside potential.
BATL closed at $5.92 on Friday, up $0.03 (+0.51%). Year-to-date, the stock has declined by -39.03%, compared to a 13.80% rise in the S&P 500 index during the same period.
Jay, a former professional market maker with over 20 years of trading and investing experience, focuses on making professional strategies accessible to everyone through his highly profitable POWR Income and POWR Stocks Under $10 investment advisory services.
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