There are a heck of a lot of "value stocks" right now, especially in the natural resources and precious metals sectors. The recent bloody sell-off (major correction) in those areas has increased the possibilites for 100% gains in some stocks over the coming months.
What causes a stock to double? The answers can be as obvious as a takeover bid or a company whose stock is worth half of the book value of the company and its assets. Other factors that can cause a stock to double are major discoveries, blow-out earnings, insider buying and generous stock buyback programs from the company itself.
Here's an example of a stock likely to double from here, compliments of Chris Mayer, the editor of Capital & Crisis newsletter.
"Gulfport Energy (GPOR:nasdaq) recently reported really strong results, and the stock climbed on the news. In my mind, Gulfport was (and still is) a deep value play. The results yesterday blew away Wall Street’s best guess -- earnings rose 56% year over year.
"So far, the fundamentals are even better than expected. Our thesis is intact, and I expect we’ll do well owning Gulfport.I listened in on the conference call, and CEO Jim Palm ended his opening remarks with this comment:
“Finally, I would like to close with a comment about the valuation of Gulfport’s assets versus the current valuation of the company by the market. At year-end 2007, pricing $92.50 for oil and $6.80 for natural gas, our engineering report showed a PV-10 of $821 million. Based on the increased price of oil and natural gas to yesterday’s close of $118.58 per barrel of oil and $8.69 per thousand cubic foot, we estimate our proved reserves alone to have a PV-10 of approximately $1.2 billion. Moreover, this number does not even begin to take into account the enormous upside we derived from Grizzly, the Bakken and other investments.”
"The market cap of Gulfport at yesterday’s close was only about $600 million, with about $80 million in net debt. That’s far below $1.2 billion -- not including any upside from the Bakken acreage or its investment in Grizzly [one of the prolific areas in which vast resources are derived]."
Another possible "double" stock company is Hecla Mining (NYSE:HL). Recent earnings reports and other assessments have been quite positive, and the potential benefits of their 100% ownership of the Greens Creek Mine Complex doesn't seem to be factored into the recent price of the share.
After last week's 12.5% correction in the price of silver, HL closed the week at $6.60, and touched a new 52-week low of $6.50. This is more than a 50% correction from Hecla's 52-week high.
