My Stock of the Week Is Surprisingly a Value Play

by Marie Rodriguez

My focus is mostly on momentum stocks with robust technical styles. However, now and again a “cost” play will seize my eye.

There are constantly right values obtainable but what they frequently are missing is some type of catalyst to liberate the fee. I do not want to allow capital to sit down idle for too long, which is why I often keep away from this approach.

I these days came across a name within the oil area, Penn Virginia Corp. (PVAC), which explores for and develops oil on the whole inside the Eagle Ford place of Texas. PVAC earned $9.19 in line with proportion in 2018 and is expected to earn $10.36 in 2019. It trades with a trailing P/E of simply 5.

Penn Virginia turned into a set to be taken over the remaining year via Denbury Resources (DNR) at a preliminary valuation of over $80 according to share but the shareholders hated the deal as it changed into main cash and it became felt that it became too low. Activist fund supervisor, Mangrove Partners, which owns extra than 10% of PVAC, fought the deal and it sooner or later fell apart with an assist from the very negative motion inside the fourth quarter of 2018.

The stock is now buying and selling at a bit greater than 1/2 the price that many shareholders thought turned into too low last yr. Nothing seems to have modified operationally and there is probably to be a few comments from control in that regard earlier than the income file inside the next 30 days.

Chevron’s (CVX) planned acquisition of Anadarko Petroleum (APC) illustrates that there is capacity for offers inside the quarter. Management has indicated a desire for a deal and there is a chief shareholder pushing for one. Even if there may be no deal in the near term, the inventory is buying and selling as if the enterprise is suffering which does now not seem like the case.

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