Oil and Gas Penny Stocks Move Up as the Public Fears Perceived Gas Shortages
Energy penny stocks are back in focus as some interesting news takes center stage. A few days ago, reports came in that the Colonial Pipeline had been shut down by a ransomware attack from the hacker group called DarkSide. While this likely won’t have a long term effect on these penny stocks, it’s definitely worth noting. This pipeline supplies around 45% of the Eastern Seaboard with fuel. And its shutdown has resulted in a few states declaring a state of emergency.
And while this likely won’t affect energy penny stocks in the long term, right now many investors are wondering which oil and gas penny stocks may benefit. When any event happens be it big or small, investors that can think outside of the box are the ones who stand to gain the most.
So, if we consider the classic supply and demand concept, this pipeline shutdown could lead to increased values for certain penny stocks to watch. As of mid-week, we are not seeing a major amount of momentum in the energy industry resulting from this event.
However, it’s difficult to tell how long it will last. It’s worth noting that there is no real shortage right now, however it has resulted in a lot of panic buying from consumers. This panic buying is the result of fear rather than any lack of fuel.
Because of this, finding the best energy penny stocks to buy in this situation, could be a valuable position. With that in mind, let’s take a look at a few that could benefit.
3 Energy Stocks to Watch Right Now
- Vertex Energy Inc. (NASDAQ: VTNR)
- Fuel Tech Inc. (NASDAQ: FTEK)
- Torchlight Energy Resources Inc. (NASDAQ: TRCH)
1. Vertex Energy Inc. (NASDAQ: VTNR)
Vertex Energy is a producer and refiner of petroleum products. While it isn’t necessarily a pure-play oil and gas stock, it does work in the production of motor oil and hydro-processing. It is considered to be one of the largest processors of motor oil in the U.S. and has several facilities around the country.
Ok so Vertex Energy is not a producer of the gasoline that goes into your car, however, given that it does produce oil in one way or another, it could stand to benefit from a vastly heightened demand.
On May 13th, Vertex reported its Q1 2021 financial results. In the results, it posted a net income of $1 million with an adjusted EBITDA of $6.5 million. This is a sizable increase of around $4.9 million over the previous quarter. And, the company reported that the price of Group II+ base oils rose by nearly 20% compared to the previous year. This supports its increase in margins during this most recent quarter.
“Our strong first-quarter results which include significant year-over-year growth in gross profit, operating income, and adjusted EBITDA, were driven by a combination of increased product demand, improved margin realization, disciplined expense management, and full optimization of our Marrero and Heartland refineries.”
Benjamin Cowart, CEO of Vertex Energy Inc.
Considering that the pandemic did have a large effect on all oil and gas companies, Vertex has managed to escape relatively unscathed. Considering this, will it be on your list of energy penny stocks to watch?
2. Fuel Tech Inc. (NASDAQ: FTEK)
Fuel Tech Inc. operates as an ancillary company working in the energy industry. It develops and commercializes state-of-the-art technologies for air pollution control, process optimization, and water treatment. Its products have been installed to date in more than 1,200 utility, industrial and municipal applications around the world.
Fuel Tech focuses on reducing the harm of energy consumption. And because of this, it has managed to stay relevant alongside the clean energy revolution. And with the perceived gas crisis as a result of massive panic on the East Coast, more are turning to the potential of non-fossil fuel dependence. Only a day ago, Fuel Tech announced its first-quarter 2021 financial results.
“Our first quarter 2021 results reflected a nearly 60% increase in net sales at our Fuel Chem business segment, driven primarily by the installation of our TIFI Targeted-in-Furnace Injection technology on new domestic coal-fired unit accounts, higher demand for power, and early recovery from the Covid-19 pandemic.
We are continuing to pursue multiple opportunities both domestically and internationally and are optimistic about the performance for Fuel Chem in 2021.”
CEO of Fuel Tech Inc., Vincent J. Arnone
Financially, FTEK managed to increase its consolidated revenue by around 33% to $5 million for the quarter. Additionally, it managed to reduce its operating loss by over $1.5 million from $2.7 million in Q1 2020 to $1.2 million in Q1 2021. Because of its work on building a cleaner way to utilize fossil fuels, will FTEK stock be on your watchlist?
3. Torchlight Energy Resources Inc. (NASDAQ: TRCH)
Torchlight Energy Resources Inc. is a penny stock that we’ve covered plenty of times this year. And arguably, it is the most pure-play oil and gas penny stock on this list. Torchlight operates out of Plano, Texas where it explores and produces oil and gas.
Its goal is to acquire as many oil fields as it can to build out a large portfolio of resources in the Permian Basin. This is an oil-rich area located in West and Central Texas.
It’s hard to talk about Torchlight Energy right now without considering the business combination that is on the table. Months ago, Torchlight announced that it and Metamaterial Inc. would be engaging in a business combination.
While this is exciting, it mostly is just a way for Metamaterial to get listed on a large U.S. exchange without having to go through the expensive and timely process of an IPO. However, this combination has continuously been pushed back, which now investors hope could occur sometime in June.
It’s worth noting that Metamaterial and Torchlight don’t have too much in common. Metamaterial as its name suggests, is a provider of advanced materials, while Torchlight develops oil and gas resources.
So right now, investors are simply waiting on the potential of this deal and when it will come to fruition. So in the meantime, TRCH remains slightly volatile and highly dependent on any updates from this business combination.
Energy Penny Stocks Could Be Worth It
Right now, energy penny stocks are in focus because of the rare event unfolding before our eyes. However, looking beyond this short-term speculative event, oil and gas penny stocks do have a lot of potential moving forward.
As the pandemic slowly but surely comes to an end, more people are traveling and returning to work. This has led to increased demand for fuels both nationwide and worldwide. So, if you’re making a list of penny stocks to watch, you may want to consider some of the names mentioned above.