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Released on Monday, September 26, 2011, 8:00 AM ET
Pittsburgh, PA (SpeculatingStocks) - China Northeast Petroleum Holdings Limited (AMEX:NEP) is trading at $2.12 per share today (Friday's close) took a down turn, which means it’s cheap and possibly under purchased and undervalued.
The company’s stock has a P/E of only around 1.90, which is extremely low, and the stock should be more valued more towards approximately $12.30 per share using standard P/E estimates with an industry bench-mark. The net income of the firm was $58 million in the last quarter alone, but this stock is micro-cap worth only about $75 million dollars in the market. Even more comparably, NEP has a EV/EBITDA of 1.64, compared to an industry approximate average of 24.12, indicating a strong possibility that the stock is undervalued.
China Northeast Petroleum has a fairly stable balance sheet, with a current ratio of 5.43 and a total debt to assets ratio of 0.265. A quick acid test ratio reveals immediate solvency at 6.075.
NEP has a 52-week average of 1.87 to 8.20, so it is definitely trading at the low end of this range. The fast and slow stochastic technical indicates that the stock should be expecting bearish growth in the long-term, approximately a 2-year period. In the short term, however, the stock seems to be rounding out a downslide and the %K will cross above the %D from below in a short amount of time.
Considering 1) the possible undervaluation of the stock, 2) the technical indicating a possible reversal in the overall trend, and 3) the apparent financial stability of the firm, NEP might be a nice micro-cap to gain hefty profits off of in the future.
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