While many of the main markets larger constituentshave experiencedstellar rises in their share prices over the last year, their performancepales whencompared to the gains enjoyed by the shareholders of some smaller companies. Lets look at two relativemarket minnowsand ask whether this momentum can continue in 2017.
World class assets
You only need to glance at the share price graphof 629m cap Hurricane Energy (LSE: HUR) over the last 12 months to understand why so many private investors are drawn to oil stocks, particularly those lower down the market spectrum. Priced at a fraction under 10p one year ago,shares in the Godalming-basedexplorer now trade at 53p thanks to aseries of extremely positive updates from the company.
Back inSeptember, Hurricaneannounced thatit had founda 620 m oil column in its Lancaster well one of the biggest such discoveries in the North Sea.Then, only last month, the companyrevealed that its Lincoln projecthad discovered another significant column of 660 m. As a result, Hurricane stated thatit would be revising the latterspre-drill resource estimates of 250m barrels of recoverable oil. There is now speculation that Lincolncould generatedouble this figure.
In 2017, the company will be bringing Lancaster to development while also turning its attention to itshugely important Halifax asset a project with the potential to be aslucrative as theother two.Assuming that Hurricane isable to replicate their success (and eventually generate over 1bn barrels of resources), its share price could be a lot higherin a few years.
Permission to dig, sir?
Those who bought shares in 15m micro-cap potash and phosphate explorer,Harvest Minerals (LSE: HMI) at the start of 2016 would have seen a 230% rise to their holding. Like Hurricane Energy, I think there couldbe more to come.
Just beforeChristmas, the company announced it had received the trial permit for its Arapua fertiliser project in Brazil, enablingHarvestto commence mining before the end of December as intended. A few days later, it released a furtherupdate which emphasised the consistent quality of the mineralisation at Maximus part of the Arapua site.
After a brief rise, the shares have now settled back tojust over 17p, largely because this news was expected.A more sustained increase could be on the cards in 2017 though. Independent consultants have beenretained to revise the current resource an announcement onwhich is expectedby mid-February. Meanwhile, Harvestwillcontinue developing the market for its KP Fertilproduct. The fact that a letter of intent has already beensigned with Veloso one of the largest coffee producers in the region bodes well.Executive Chairman, Brian McMaster has also commented on the companysdesireto seek out other projects which fit our criteria of being able to generate near term cash flows. Given whatHarvesthas achieved in 2016on a limited budget, I regard this statement of intentas encouraging.
Make no mistake, Harvest Minerals remains a speculative play and one that is only likely to appeal to those who have sufficiently long investing horizons. Given that Brazilis the fifth largest consumer of fertiliser in the world and almost entirely dependent on importing it from abroad, however, I think the potential rewards may outweigh the risk.
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Paul Summers owns shares in Harvest Minerals. 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.