Knowing when to sell a stock is just as important as knowing when to buy. It oftenposes a greater psychological challenge as nobody likesto admit to makinga badcalland losing money as a result. Sometimes you have to bitethe bullet, so what should you do if you hold any of these three stocks?
Januarywas a tough month for investors in Asia and Africa-focused gas and oil explorerOphir Energy Plc (LSE: OPHR), but it was a tough month for pretty much every energy stock, as fears of a Chinese hard landing intensified. In the teeth of the storm, when the stockhad plunged10% in a week, I said Ophirwas tough enough to battle through2016. Im therefore happy to report its up 13% in the last week.
The recovery islargely be down to oil hitting a two-month high, with Brent crude creeping above $37 a barrel (up from just $27 in January). Itmay struggle to climb higherwith US crude inventories spiking to the highest level since April 2015, which suggests that supply will outstrip demand for some time yet, but any progressis welcome.
Ophirs healthy balance sheet includes $650m at year-end that should cover a couple of years worth of capex and exploration. The recent drop in gas and LNG prices, particularly in Ophirs Asiamarket, is a concern. Existing investors willstill believe they can convert losses into gains but new investors shouldtread carefully.
2015 was a tough year for Kurdistan-based oil explorer Genel Energy (LSE: GENL), which sawrevenues plunge34% to $334m due to falling oil prices, more than offsetting a 22% rise in production volumes to 84,900 bopd. The good news that the Kurdish Regional Government committed to regular payments for oilexports was more than offset by the direnews of the 75% downgrade in estimated 2P reserves atitsTaq Taq field, where Genel generates around 60% of its production.
Chief executive Murat zgl saystheres still cashto be madefrom 264m barrels of net 2P reserves, given that both Taq Taq and Tawke remain low-cost oil fields by any global benchmark. Thebusiness looksrelatively solid for now, with a cash balance of$455m, against $489m in 2014, and forecast 2016 revenues of$160m to $220m, assuming $35 a barrel Brent. With the oil price rising andthe bad news onTaq Taq in the price, few will wantto sell now.
Mining specialistXtract Resources(LSE: XTR)fell almost 20% in February and has failed to capitalise on the recovery in commodity prices and stocks. As well as falling prices, management has had the extra worry of failing to meetits volume targets, as its Chepica mine only has one exit point. Q3 revenues fell 16% to $375,802, although a 44% cut in costs helped drive a 39% rise in profits to $208,269. I suspect most investors will be willing to run their losses from Xtract that little bit longer, but freshcommodity price slippage willhurt.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.