Montage Resources is a small-cap corporation in Appalachia. The company engages in hydrocarbon exploration and production, as well as transport, with crude oil and natural gas operations. Montage owns 325 actively producing wells and over 195,000 undeveloped acres in Ohio, Pennsylvania, and West Virginia.
Oil is called “black gold” for a good reason. It brings enormous profits. While the oil prices experienced a historic dip last week, causing investors to panic for a while, they rebounded quickly. Yes, disasters happen. But when the governments lift the coronavirus lockdowns, dwindling demand on oil will grow again.
Meanwhile, it’s a good time to grab oil shares at a lower price. While most of the oil companies have excellent gains, it’s always better to know which ones have more potential. That’s why the analysts recommend Montage Resources.
The company’s revenue hit $174.1 million in 2019. Its EPS also skyrocketed, exceeding the forecast by 608%. All in all, Montage gained 67% and 34%, respectively, year-by-year.
Furthermore, the company currently has an attractive point of entry, just $4.82 per share. Its shares declined by 40% in 2020 due to the coronavirus crisis. Usually, oil share prices are much higher. And when the crisis passes, it will bring more profit.
What do the analysts say?
The world’s major oil suppliers are preparing to cut production and boost prices, but according to experts, the cuts may not last. Meanwhile, Montage is well-positioned to gain if they resume their crude oil price war.
John White, Roth Capital analyst, stated that with the expert’s estimation, this stock would generate $32 million of free cash flow in 2020.
The bulk of this cash flow, $20.4 million, occurs in the first quarter due to robust production, as well as much higher commodity prices versus the remaining quarters – noted White. He set his price target at $6.50 for this stock, implying an upside of 35%.
Other Wall Street analysts also consider Montage Resources as a strong buy. However, with their estimation, the potential upside lands at 25%.