Cheap Energy Stocks To Buy For Under $5 Right Now; Are They Worth The Risk?
Opposed to popular opinion, when it comes to energy penny stocks, it’s not just green energy that’s in focus. The broader sector is gaining big attention in 2021, and for a good reason. Take out the short-term oil price volatility, and we have a much bigger picture idea to consider. It’s the fact that there’s now a coronavirus vaccine and, with that, hopes of a sweeping economic reopening. Obviously, there is a long road ahead to recovery. With stimulus likely continuing this year and fiscal policy supportive of strengthening the economy, some see energy as a backbone.
The fact that commerce requires fuel sources, manufacturing requires power, and even green energy projects need to still get built all point to the broader energy sector as a solution to meet demand. So, where should you look right now? As I explained, green energy penny stocks are red hot right now. Thanks to the Biden Administration’s boisterousness on the topic, traders are flocking to things like solar and electric vehicle stocks right now. Some $400 billion will be spent on green energy projects by the Biden-run government with a goal to create 10 million new jobs.
So what is there to power the heavy machinery, power the plants to build the components, and become the fuel source to power this green energy economy? Many still say that traditional resources like oil and natural gas are still going to be in use to achieve these lofty goals. If you’re looking for certain energy stocks under $5, volatility will certainly be a factor. Keeping this in mind, though these are cheap, are these penny stocks to buy under $5 worth the higher risk?
Energy Penny Stocks To Buy [or avoid]
- Tellurian Inc. (NASDAQ: TELL)
- Orbital Energy Group Inc. (NASDAQ: OEG)
- U.S. Well Services Inc. (NASDAQ: USWS)
Wolfe Research recently upgraded shares of this energy stock to Outperform from Peer Perform. It also set a price target of $5. One of the reasons for the bullishness on Tellurian is likely due to economic reopening optimism. Before the pandemic, shares of TELL stock were trading well above $5. In fact, the energy company kicked off 2020 at $7.30 per share. It even saw highs of $11.80 within the last 2 years. As many readers already know, Tellurian has been moving with the industry trend (in both directions). But the volatility hasn’t shied away traders.
Obviously, the economic shutdown and pandemic social distancing rules have put the breaks on many industries, with oil and gas being a big one. However, with vaccines being distributed, is there now some light at the end of the tunnel?
Bullish sentiment began fuelling this latest 2021 move after Tellurian co-founder, and executive chairman Charif Souki said the company is looking to start construction on its $16.8 billion Driftwood liquefied natural gas export project by this summer. Something else to consider is the goal of lower to no emissions fuels.
The new Administration has made this a clear goal. The long-term outlook for LNG could be much brighter than that of other fossil fuels. Comparatively speaking, it’s lower cost and lower emissions from a production and combustion standpoint. Will Tellurian be able to benefit from this new opportunity?
Orbital Energy Group Inc.
Another portion of the energy industry you need to keep in mind is the companies providing supportive services. This includes things like infrastructure, installation services, delivery companies, etc. In light of this, Orbital Energy could be one of the names to keep track of. What’s more, the company has diversified itself enough to have exposure to the green energy niche within this industry. It’s three operating businesses include Orbital Gas Systems, Inc., Orbital Power Services, and Orbital Solar Services. These companies provide everything from engineering services to construction and manufacturing.
Similar to Tellurian, Orbital was also given a boost early this year, thanks to analysts. B. Riley boosted its price target from $2.50 to $4 and maintained a Neutral rating on the stock. Furthermore, the company just completed a large financing round that could come in handy in 2021.
Orbital’s CEO and vice-chairman, Jim O’Neil, commented, “This cash infusion enables Orbital to take a much more aggressive stance in growing both organically and through strategic acquisitions. The capital will be used to enhance the growth and development of Orbital Power Services and our new foundation division, Eclipse, as well as to fund mobilization costs associated with upcoming large solar projects at Orbital Solar Services. Additionally, this raise will allow us to consider previously unavailable acquisition targets that can enhance our growth and transition to profitability.”
U.S. Well Services Inc.
Similar to Orbital, U.S. Well Services is one of the cogs in the energy ecosystem. Specifically, the company’s electric frac technology decreases emissions and sound pollution while generating certain efficiencies, including customer fuel cost savings compared to traditional diesel fleets.
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What has become an attraction to traders is the series of recent deals. U.S. Well Services finalized an extension of its electric frac contract with Range Resources earlier this month. “Range is a leader in capital efficiency, well costs and reducing emissions intensity thanks to the implementation of advanced technologies like U.S. Well Services’ electric fracturing fleet,” explained Jeff Ventura, Range Resources’ President, and CEO.
Following this deal, the company signed a long-term electric frac contract with EQT Corporation (NYSE: EQT). This deal has U.S. Well Services extending its existing contract for one electric frac fleet. The company will also deploy a second fleet on a contracted basis. Both of these contracts represent multi-year fleet deals if all optional extensions are exercised.
Are Energy Penny Stocks Worth It?
There is definitely a lot of excitement in energy stocks right now. Thanks to reopening optimism, the entire supply chain is gaining momentum. It’s important to remember that, while this is great in the near-term, many companies have also raised considerable amounts of money to stay afloat over the last year. Also, with companies directly related to oil and gas, the price of the commodity itself can become a major factor in volatility, i.e. if prices go up or down, the market can overreact at times. In light of this, weighing the risk of dilution, the true book value of these companies, and current operational models, will they be worth the risk for the long-term?