We regularly come across stocks that we think are worth highlighting for the benefit of our readers even though we seldom get to write them up on our blog. This is simply a function of time and we’ll make an effort to highlight stocks or trends we see within MarketGrader.com on a regular basis.
Yesterday we came across a company we thought worth writing about: Contango Oil & Gas (MCF). It was our ‘Stock of the Day’ yesterday. The ‘Stock of the Day’ is, as those who follow it know, selected by MarketGrader from our list of companies with the biggest four-week jump in our Sentiment score. They must also have, of course, strong underlying fundamentals. MCF struck us as particularly interesting not only because of the impressive climb in Sentiment, which jumped 93% in four weeks from 4.6 to 8.9 (out of 10) but also because a big chunk of that jump happened literally overnight (from Tuesday to Wednesday). This tells us that others must know something most investors don’t.
Yet even if nothing extraordinary were to occur in the near future (such as an acquisition or another piece of news likely to make the stock rise) investors would be well advised to own a solid company in a sector currently in favor. Contango is ranked 14th by MarketGrader.com in the Oil & Gas Exploration & Production sub-industry based on its overall fundamental grade of 71, out of 249 companies under coverage (108 of which trade in Canada). It ranks 7th based on its current sentiment score.
Its fundamental strength comes from across all of our four analysis categories (Growth, Value, Profitability and Cash Flow). Its trailing 12 month revenue is up more than 700% in the last three years with year over year quarterly sales up 55%. Its TTM net income rose over 1,100% also in a three year period with its latest quarterly net up 41% from the year earlier report. Contango’s margins have been expanding steadily over the last year and are very impressive at 90% gross margin, 74% EBITDA margin, 50% operating margin and 31% NPM. The stock trades at 17 times trailing 12 month earnings per share and at 9.9 times forward EPS (12 months). The company has no debt, it generated $12.25 million in free cash flow last quarter and has $66 million in cash on hand. Its market cap stood at $906 million as of yesterday’s close. Below you may find our latest report on it.
MarketGrader.com’s latest report: MCF.2010.11.17.12.41.50.971
