Joes take on SLG BNN News 15/11/2013 Sterling Resources (SLG TSX-V)
In the past, we were bullish on this story from 2004 ($0.70) to early 2011 ($4.50+) and when the stock price reached our target, I recommended selling the stock repeatedly on Market Call and Market Call Tonight. I also sold the stock when it reached our target.
We are now bullish again for the following reasons:
- The much lower stock price (the stock fell as the company faced production delays and financial constraints)
- Production at the Breagh UK gas field commenced in Q4/13 and is ramping up as new wells are brought on stream.
- Oil production at Cladhan should come on stream in Q2/15 adding materially to cash flow
- There is no value in the stock for the upside from the Romania offshore natural gas discoveries
- The stock trades below book value of $0.82 (Q2/13)
- Cash flow in 2014 should reach $0.38 per share – stock trades at a very low cash flow multiple
- Our 12-month target is $1.60/share