Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (CAD) | Target 1 (CAD) | Target 2 (CAD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 5 Mar, 25 | ALV | Speculative Buy | CAD 4.63 | CAD 4.908 | CAD 5.153 | 11 days | 11.3% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Alvopetro Energy Ltd. operates as an independent upstream and midstream operator. It engages in the acquisition, exploration, development, and production of hydrocarbons. The company holds interests in the Caburé and Murucututu natural gas assets, Block 182 and 183 exploration assets, and Bom Lugar and Mãe-da-lua oil fields, which covers an area of approximately 22,166 acres in the Recôncavo basin onshore Brazil. Alvopetro Energy Ltd. was incorporated in 2013 and is headquartered in Calgary, Canada.
Higher Net Margin: 55.2% in Q3 2024 vs 10.4% of Industry Median
Higher Gross Margin: 92.0% in Q3 2024 vs 56.2% of Industry Median
Lower Average realized prices (USD/boe): 66.46 in Q3 2024 vs 78.90 in Q3 2023
Lower Cash flows from operating activities: USD 10.7 mn in Q3 2024 vs USD 12.4 mn in Q3 2023
Volatility in the commodity price ,Trade tariffs, Regulatory risks, Inflationary pressures, Currency fluctuations, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 4.63 | 4.18 | 4.908 | 5.153 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Strong Revenue Growth and Increased Sales Volumes:
The company has shown significant growth in sales volumes, with a 24% year-over-year increase from Q3 2023 and a 29% quarter-over-quarter increase from Q2 2024. This robust sales growth, driven by increased natural gas demand, suggests that the company is effectively expanding its market share and is positioned well to capture the growing demand for energy resources.
Higher Financial Position and Capital Efficiency:
The company's net income of USD 7.2 mn in Q3 2024 is a considerable increase of USD 1.3 mn over Q3 2023 and a larger gain of USD 4.8 mn over Q2 2024. This increased profitability was mostly due to increasing sales volumes and favorable foreign exchange gains in Brazil. Additionally, the company's working capital surplus increased to USD 15.8 mn as of September 30, 2024, up USD 2.7 mn from December 31, 2023. These measures reflect the company's ability to generate steady cash flow while maintaining a strong balance sheet, allowing for reinvestment and expansion.
Strategic Entry into Western Canadian:
The company's development into the Western Canadian Sedimentary Basin provides access to high-quality properties and significant resources, which are supported by a robust service industry and cutting-edge technology. The group is well-positioned to establish a complementary growth platform, generating attractive returns while maintaining operational efficiency.
Considering the expected valuation upside, higher financials, strong operating margins, healthy production and sales volume, decent dividend yield, current trading levels and key business risks, a ‘Speculative Buy’ recommendation has been given on the stock at the last closing price of CAD 4.63, as on March 4, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Energy Industry: Oil & Gas E&P
| Company | Change (CAD) | Price (CAD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| ALV Alvopetro Energy |
-0.05 0.97% | 5.12 | 9.26 | 3.75 | 3.75 | 1.51 | 2.28 | 4.41 |
| LGN Logan Energy Corp |
-0.01 1.52% | 0.65 | - | 86.96 | 4.50 | 2.32 | 4.02 | 15.65 |
| SEI Sintana Energy Inc |
0.01 1.75% | 0.58 | - | - | 1.42 | 10.40 | -8.9281 | |
| RECO Reconnaissance Energy Africa Ltd |
- -% | 0.51 | 2.97 | - | 10.07 | 1.81 | 11.64 | -7.5726 |
| SNM ShaMaran Petroleum Corp |
- -% | 0.22 | - | 3.07 | 3.08 | 1.25 | 5.07 | 7.18 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is March 04,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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