Category: Energy

Wednesday, February 12, 2020

Energy Fuels Inc. (UUUU)

Relief is in Sight

Energy Fuels Inc together with its subsidiary is engaged in the extraction and recovery of uranium properties in the United States. The company operates in two segments, ISR Uranium and Conventional Uranium. It conducts its ISR activities through its Nichols Ranch Project, located in northeast Wyoming. It conducts its conventional uranium extraction and recovery activities through its White Mesa Mill. In addition, the group also owns uranium and uranium, vanadium properties and projects in various stages of exploration, permitting, and evaluation. Energy Fuels derives most of the income through the sale of Uranium.

Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Government purchase program. President Trump’s 2021 budget proposal includes $150 million to fund a strategic uranium reserve to provide assurance of uranium supplies and to support U.S. nuclear fuel cycle capabilities through the domestic production and conversion of uranium. Assuming no changes by the time an appropriations bill is signed into law by September 30, purchases could begin in fiscal year 2021 which begins October 1.

Step in the right direction. A government purchase program is consistent with several proposals by various industry groups, including the Nuclear Energy Institute (NEI) which were discussed in our research note dated…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Wednesday, February 12, 2020

Energy Fuels Inc. (UUUU)

Relief is in Sight

Energy Fuels Inc together with its subsidiary is engaged in the extraction and recovery of uranium properties in the United States. The company operates in two segments, ISR Uranium and Conventional Uranium. It conducts its ISR activities through its Nichols Ranch Project, located in northeast Wyoming. It conducts its conventional uranium extraction and recovery activities through its White Mesa Mill. In addition, the group also owns uranium and uranium, vanadium properties and projects in various stages of exploration, permitting, and evaluation. Energy Fuels derives most of the income through the sale of Uranium.

Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Government purchase program. President Trump’s 2021 budget proposal includes $150 million to fund a strategic uranium reserve to provide assurance of uranium supplies and to support U.S. nuclear fuel cycle capabilities through the domestic production and conversion of uranium. Assuming no changes by the time an appropriations bill is signed into law by September 30, purchases could begin in fiscal year 2021 which begins October 1.

Step in the right direction. A government purchase program is consistent with several proposals by various industry groups, including the Nuclear Energy Institute (NEI) which were discussed in our research note dated…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Wednesday, January 8, 2020

Energy Industry Report

Exploration and Production: 2019 Review and Outlook

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to end of report for Analyst Certification & Disclosures

• End of a difficult year.  Energy stocks rallied in the fourth quarter and ended the year up 1.8%, well underperforming the broad market.  Weak results mirror the change in oil prices.  Oil prices rose from $54 per barrel to $62/BBL in the fourth quarter in response to an improved global economic outlook and growing tension in the Middle East but were down for the year. The oil futures curve indicates that the market does not expect a recent rise in spot prices to continue.  Natural gas prices were also weak in 2019.
• The outlook for energy stocks has improved but it is too early to turn positive.   We continue to believe that oil prices are locked in a range of $50-$65 per barrel, a range that puts pressure on energy companies with high debt positions.  Any movement outside that range will cause domestic producers to react by increasing/decreasing drilling and thus production which will eventually move prices back into the range. While too early to become positive on the group, we believe investors should maintain a modest exposure to energy stocks as a way to play any potential rise in energy prices.

Year and quarter in review

Exploration and production companies were glad to see the ball drop on 2019 and close out a frustrating year.  A strong performance in the fourth quarter (XLE E&P index rose 6.9%) offset declines in the second and third quarter and left the index in the green (up 1.8%) for the year.  Of course, this performance paled in comparison to the annual returns of the broader market (S&P 500 up 26.7% and the Russell 2000 up 18.7%).  As expected, the performance of the XLE mirrored oil prices, which rose in the first quarter, fell in the second and third, and then rose again in the fourth.  The rise in the February 2020 oil contract rose from $54 per barrel to $62/BBL in the fourth quarter in response to an improved global economic outlook and growing tension in the Middle East.

The market seems to be dismissing the long-term impact of the president’s political saber rattling with Iran.  We would note that future oil prices are below the current spot price.  Clearly the market has grown weary of the constant threats of war by both countries and discounts the probability of war.  Or, as we have discussed in the past, the market realizes the diminished role OPEC and the Middle East now have on West Texas Intermediate oil pricing. 

When companies report December quarter and year-end results next month, we expect most management to report an increase in their hedge position and an increase in their drilling budgets.  Most energy companies still set capital expenditures to stay within their operating cash flow but are anxious to turn on the spigots.  With higher prices and cash flow, look for modest increases in drilling. 

If energy investors are looking away from oil for relief, they won’t get any help from gas producers.  The February Henry Hub natural gas contract began the year near $3.00 per thousand cubic feet (mcf) and closed the year at $2.19 per mcf.  The year’s decline was largely felt in the last two months of the year when the contract fell $0.67 in response to mild weather. 

 

Outlook

As we look towards the new year, the outlook for energy stocks is improved but not yet positive.  We continue to believe that oil prices are essentially locked in a range of $50-$65 per barrel.  Any movement outside that range will cause domestic producers to react by increasing/decreasing drilling and thus production which will eventually move prices back into the range.  We view the current movement to the upper end of the range as driven largely by political events and thus temporary.

Unfortunately, at prices within the $50-$65 range, most small energy companies are struggling to operate within free cash flow.  They have cut operating costs, restructured debt, and focused on only the most profitable areas of production.  Those with high leverage are vulnerable to line of credit downgrades that could create financial strain. 

We favor energy companies with a large portfolio of drilling prospects and a strong balance sheet to fund future drilling or other expenditures.  We believe energy companies with strong financial positions could begin to consider share repurchases in 2020 if energy prices remain strong and stock prices have not responded.  While too early to become positive on the group, we believe investors should maintain a modest exposure to energy stocks as a way to play any potential rise in energy prices.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of
transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public
appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.

NOBLE RATINGS DEFINITIONS	% OF SECURITIES COVERED	% IB CLIENTS
Outperform: potential return is >15% above the current price	86%	25%
Market Perform: potential return is -15% to 15% of the current price	14%	2%
Underperform: potential return is >15% below the current price	0%	0%

NOTE: On August 20, 2018, Noble Capital Markets, Inc. changed the terminology of its ratings (as shown above) from “Buy” to “Outperform”, from “Hold” to “Market Perform” and from “Sell” to “Underperform.” The percentage relationships, as compared to current price (definitions), have remained the same. Additional information is available upon request. Any recipient of this report that wishes further information regarding the subject company or the disclosure information mentioned herein, should contact Noble Capital Markets, Inc. by mail or phone.

Noble Capital Markets, Inc.
225 NE Mizner Blvd. Suite 150
Boca Raton, FL 33432
561-994-1191

Noble Capital Markets, Inc. is a FINRA (Financial Industry Regulatory Authority) registered broker/dealer.
Noble Capital Markets, Inc. is an MSRB (Municipal Securities Rulemaking Board) registered broker/dealer.
Member – SIPC (Securities Investor Protection Corporation)
Report ID: 11091

Wednesday, January 8, 2020

Energy Industry Report

Exploration and Production: 2019 Review and Outlook

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to end of report for Analyst Certification & Disclosures

• End of a difficult year.  Energy stocks rallied in the fourth quarter and ended the year up 1.8%, well underperforming the broad market.  Weak results mirror the change in oil prices.  Oil prices rose from $54 per barrel to $62/BBL in the fourth quarter in response to an improved global economic outlook and growing tension in the Middle East but were down for the year. The oil futures curve indicates that the market does not expect a recent rise in spot prices to continue.  Natural gas prices were also weak in 2019.
• The outlook for energy stocks has improved but it is too early to turn positive.   We continue to believe that oil prices are locked in a range of $50-$65 per barrel, a range that puts pressure on energy companies with high debt positions.  Any movement outside that range will cause domestic producers to react by increasing/decreasing drilling and thus production which will eventually move prices back into the range. While too early to become positive on the group, we believe investors should maintain a modest exposure to energy stocks as a way to play any potential rise in energy prices.

Year and quarter in review

Exploration and production companies were glad to see the ball drop on 2019 and close out a frustrating year.  A strong performance in the fourth quarter (XLE E&P index rose 6.9%) offset declines in the second and third quarter and left the index in the green (up 1.8%) for the year.  Of course, this performance paled in comparison to the annual returns of the broader market (S&P 500 up 26.7% and the Russell 2000 up 18.7%).  As expected, the performance of the XLE mirrored oil prices, which rose in the first quarter, fell in the second and third, and then rose again in the fourth.  The rise in the February 2020 oil contract rose from $54 per barrel to $62/BBL in the fourth quarter in response to an improved global economic outlook and growing tension in the Middle East.

The market seems to be dismissing the long-term impact of the president’s political saber rattling with Iran.  We would note that future oil prices are below the current spot price.  Clearly the market has grown weary of the constant threats of war by both countries and discounts the probability of war.  Or, as we have discussed in the past, the market realizes the diminished role OPEC and the Middle East now have on West Texas Intermediate oil pricing. 

When companies report December quarter and year-end results next month, we expect most management to report an increase in their hedge position and an increase in their drilling budgets.  Most energy companies still set capital expenditures to stay within their operating cash flow but are anxious to turn on the spigots.  With higher prices and cash flow, look for modest increases in drilling. 

If energy investors are looking away from oil for relief, they won’t get any help from gas producers.  The February Henry Hub natural gas contract began the year near $3.00 per thousand cubic feet (mcf) and closed the year at $2.19 per mcf.  The year’s decline was largely felt in the last two months of the year when the contract fell $0.67 in response to mild weather. 

 

Outlook

As we look towards the new year, the outlook for energy stocks is improved but not yet positive.  We continue to believe that oil prices are essentially locked in a range of $50-$65 per barrel.  Any movement outside that range will cause domestic producers to react by increasing/decreasing drilling and thus production which will eventually move prices back into the range.  We view the current movement to the upper end of the range as driven largely by political events and thus temporary.

Unfortunately, at prices within the $50-$65 range, most small energy companies are struggling to operate within free cash flow.  They have cut operating costs, restructured debt, and focused on only the most profitable areas of production.  Those with high leverage are vulnerable to line of credit downgrades that could create financial strain. 

We favor energy companies with a large portfolio of drilling prospects and a strong balance sheet to fund future drilling or other expenditures.  We believe energy companies with strong financial positions could begin to consider share repurchases in 2020 if energy prices remain strong and stock prices have not responded.  While too early to become positive on the group, we believe investors should maintain a modest exposure to energy stocks as a way to play any potential rise in energy prices.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of
transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public
appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.

NOBLE RATINGS DEFINITIONS	% OF SECURITIES COVERED	% IB CLIENTS
Outperform: potential return is >15% above the current price	86%	25%
Market Perform: potential return is -15% to 15% of the current price	14%	2%
Underperform: potential return is >15% below the current price	0%	0%

NOTE: On August 20, 2018, Noble Capital Markets, Inc. changed the terminology of its ratings (as shown above) from “Buy” to “Outperform”, from “Hold” to “Market Perform” and from “Sell” to “Underperform.” The percentage relationships, as compared to current price (definitions), have remained the same. Additional information is available upon request. Any recipient of this report that wishes further information regarding the subject company or the disclosure information mentioned herein, should contact Noble Capital Markets, Inc. by mail or phone.

Noble Capital Markets, Inc.
225 NE Mizner Blvd. Suite 150
Boca Raton, FL 33432
561-994-1191

Noble Capital Markets, Inc. is a FINRA (Financial Industry Regulatory Authority) registered broker/dealer.
Noble Capital Markets, Inc. is an MSRB (Municipal Securities Rulemaking Board) registered broker/dealer.
Member – SIPC (Securities Investor Protection Corporation)
Report ID: 11091

Monday, December 30, 2019

Energy Fuels Inc. (UUUU)

Is Relief for the Uranium Industry Imminent?

Energy Fuels Inc together with its subsidiary is engaged in the extraction and recovery of uranium properties in the United States. The company operates in two segments, ISR Uranium and Conventional Uranium. It conducts its ISR activities through its Nichols Ranch Project, located in northeast Wyoming. It conducts its conventional uranium extraction and recovery activities through its White Mesa Mill. In addition, the group also owns uranium and uranium, vanadium properties and projects in various stages of exploration, permitting, and evaluation. Energy Fuels derives most of the income through the sale of Uranium.

Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

U.S. Nuclear Fuel Working Group recommendations. While it has been reported that the working group submitted recommendations to the President in November, they have not been made public. In our view, the President is more likely to make a policy decision and use the working group recommendations as the basis for decision-making rather than publishing the working group recommendations ahead of a decision.

Probable outcomes.  What seems most likely, at the very least, is a commitment by the U.S. government to purchase domestically mined uranium over a multi-year period to build reserves. However, the minimum price point is a crucial detail and we also believe that additional…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

$25 Billion Created While $11 Billion Destroyed: What’s going on with energy stocks?

(Note: companies that
could be impacted by the content of this article are listed at the base of the
story [desktop version]. This article uses third-party references to provide a
bullish, bearish, and balanced point of view; sources are listed after the
Balanced section.)

On Tuesday, Chevron indicated it would write down assets by $10 billion to $11 billion to reflect lower energy prices and decreased expected asset returns.  The write-down would be one of the largest on record, rivaling some of the write downs taken by large banks during the financial crisis.  On Wednesday, Saudi Arabian oil company Aramco raised $25.6 billion in an IPO of 1.5% of the company’s stock.  The new Aramco stock rose 20% in the first two days of trading on the Saudi stock exchange and ended with a market value above $2.0 trillion, making it the most valuable public company.  So how should an energy investor view these two events?  Does the Aramco IPO show that there is demand for energy stocks, or is it drawing investors away from other energy stocks?  Does the Chevron write down indicate further weakness in the sector, or has the market already factored the asset value decline given recent underperformance?

Source: CNBC, XLE Energy Index versus SPDRs YTD

Red-hot Biotech Stocks Boosting Small Cap Indexes in Q4

(Note: companies that
could be impacted by the content of this article are listed at the base of the
story [desktop version]. This article uses third-party references to provide a
bullish, bearish, and balanced point of view; sources are listed after the
Balanced section.)

Redhot Biotech
Stocks Boosting Small Cap Indexes in Q4

As of December 3, Russell 2000 Index (RUT, +7.3), which is a benchmark for small-cap stocks, is outperforming the S&P 500 (SP50, +5.2%) and Russell 3000 (RUA, +5.5%) benchmark indices in Q4 2019 (Exhibit 1). The Russell 2000 Index is a market-capitalization weighted index measuring the performance of approximately 2,000 small cap American companies in the Russell 3000 Index, which includes 3,000 largest cap U.S. stocks (adjusted annually).

Exhibit 1: Russell 2000 Relative Price
Performance, Q4 2019 (as of 12/3/2019)

Source: CapitalIQ

The Russell 2000 index achieved a new 52-week high on November 27 (1,634.1).  The strong performance is primarily attributed to the strength in the biotechnology and financial sectors. Biotechnology is a major driver for recent gains. These sectors are heavily weighted in the Russell 2000 index with 26% for financials and 15% healthcare (Exhibit 2).

Exhibit 2: Sector
Weightings for The Russell 2000

 

Source: New
York University Stern School of Business, FTSE Russell

Thus far, the data demonstrates a positive change in sentiment by biotechnology investors as the sector surged in Q4, in stern contrast with the relative underperformance seen in the first three quarters of 2019. Both NYSE Arca Biotechnology (BTK, 20.6%) and NASDAQ Biotechnology (NBI, +21.7%) indices have outperformed the S&P 500 (SP50, +5.2%) and Russell 3000 (RUA, +5.5%) indices by a significant margin in Q4 2019 (as of December 3, 2019) (Exhibit 3).

Exhibit 3: Biotechnology Relative Price
Performance Q4 2019 (as of 12/3/2019)

Source: CapitalIQ

 

As the biotechnology sector soared and small-cap stocks outpaced the broader markets, picking the next gemstone in small/micro-cap biotechs could generate high cumulative returns for investors. 

Friday, December 13, 2019

Energy Services of America (ESOA)

Solid Finish to Fiscal Year 2019 and Special Dividend Announced.

Energy Services of America Corporation is engaged in providing contracting services for energy-related companies. The company is primarily engaged in the construction, replacement, and repair of natural gas pipelines and storage facilities for utility companies and private natural gas companies. It services the gas, petroleum, power, chemical and automotive industries, and does incidental work such as water and sewer projects. Energy Service’s other services include liquid pipeline construction, pump station construction, production facility construction, water and sewer pipeline installations, various maintenance and repair services and other services related to pipeline construction.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for the price target, fundamental analysis, and rating.

Solid End to fiscal year with results above expectations. FY2019 EBITDA of $8.0 million was above our estimate of $6.6 million estimate due to lower costs that more than offset lower revenue. The completion of the Goff project had a slightLY negative impact, but margins were higher than expected; gross margin was 7.3% (+87 basis points) and EBITDA margin was 4.6% (+85 basis points). The current backlog of $63 million was up $8 million higher than 3Q2019.

Increasing FY2020 EBITDA to reflect positive finish to FY2019. Assuming no weather and/or operating miscues, we forecast that FY2020 EBITDA will move up to $8.6 million based on EBITDA margin of 5.6%, which is…

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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Wednesday, December 11, 2019

Energy Services of America (ESOA)

Launching Coverage. Looking for Solid Finish to Fiscal Year.

Energy Services of America Corporation is engaged in providing contracting services for energy-related companies. The company is primarily engaged in the construction, replacement, and repair of natural gas pipelines and storage facilities for utility companies and private natural gas companies. It services the gas, petroleum, power, chemical and automotive industries, and does incidental work such as water and sewer projects. Energy Service’s other services include liquid pipeline construction, pump station construction, production facility construction, water and sewer pipeline installations, various maintenance and repair services and other services related to pipeline construction.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Launching coverage on Energy Services of America (ESOA),  a small cap idea in the construction services industry with an energy focus. ESOA helps energy and utility companies build out and maintain distribution networks.

End to FY2019 should be solid.  After two uneven years and delays on a large project, we expect FY2019 to finish on a solid note. Our EBITDA estimate of $6.6 million compares to $8.1 million in FY2018 and $3.6 million in FY 2017. FY2020 operating results poised to rebound. While the outlook for overall infrastructure activity is more muted versus the past five years due to lower energy prices, the risk profile has improved with less large projects. Assuming there are no weather and/or…

Get the full report on Channelchek desktop.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Monday, November 4, 2019

Energy Fuels Inc. (UUUU)

No Big Surprises

Energy Fuels Inc together with its subsidiary is engaged in the extraction and recovery of uranium properties in the United States. The company operates in two segments, ISR Uranium and Conventional Uranium. It conducts its ISR activities through its Nichols Ranch Project, located in northeast Wyoming. It conducts its conventional uranium extraction and recovery activities through its White Mesa Mill. In addition, the group also owns uranium and uranium, vanadium properties and projects in various stages of exploration, permitting, and evaluation. Energy Fuels derives most of the income through the sale of Uranium.

Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Third quarter results in line with expectations. Energy Fuels reported a third quarter loss of $6.8 million, or ($0.07) per share compared to a loss of $13.8 million, or ($0.16) per share, during the prior year period.  We had expected a loss of $6.4 million, or ($0.07) per share.
  
• Updating estimates.  We are increased our 2019 loss estimate to ($0.36) per share from ($0.34) per share based on lower revenue anticipated in the fourth quarter.  Due to low commodity prices, we expect the…
  
  

  
  

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This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

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certification and important disclosures included in full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Is Fracking Safe?

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bullish, bearish, and balanced point of view; sources are listed after the
Balanced section.)

Oil and natural gas production have grown dramatically due to the introduction of horizontal drilling and hydraulic fracking. Fracking is a drilling technique in which water, sand, and chemicals are pumped into well holes under high levels of pressure, fracturing shale formations to increase the flow of hydrocarbons toward the well. Opponents of fracking have made claims that the procedure leads to health and ecological concerns.

Are Planned Power Outages Worth the Cost?

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story [desktop version]. This article uses third-party references to provide a
bullish, bearish, and balanced point of view; sources are listed after the
Balanced section.)

Pacific Gas & Electric cut power to more than one million customers in the San Francisco Bay Area this week as a precaution against sparking wildfires. The utility took this unusual step in response to high-wind and drought conditions. The planned blackout comes after northern California rebounds from two of the most damaging wildfires in history: the winery wildfire of 2017 and the Paradise wildfire of 2018. The outage is creating an extreme hardship for customers without power. Are the utility’s actions prudent given recent wildfire issues (bull case) or is the company overreacting to concerns that it should have addressed long before now (bear case)?

Tuesday, October 8, 2019

Energy Industry Report

Summer’s End Brings No Relief For Energy Stocks

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Listen To The Analyst

Refer to end of report for Analyst Certification & Disclosures

• Energy stocks fell 9% underperforming the overall market by 8% for the second straight quarter. The decline matches the drop in oil prices. Natural gas prices were flat, which is not uncommon for the summer quarter.
• Oil prices fell 9% as two spikes proved to be short lived. Oil prices crossed above $60/BBL twice in response to Persian Gulf tension, but quickly declined when conflicts did not escalate. Oil inventories continue to rise as the U.S. approaches the point of being a net energy exporter. Investor focus has shifted to a slowing global economy.
• A sustained period near $50/BBL could put pressure on energy companies. The long-term futures curve is flat. Hedges are rolling off and companies are being forced to work to lower capital expenditures and operating costs to stay within operating cash flow. Smaller companies with weak balance sheets may face liquidity issues.
• We remain cautious on the group. We favor companies with low debt levels, high hedge positions and low operating costs.

Energy stocks reported another disappointing quarterly as oil prices continued their decline. The XLE Energy Select Sector SPDR Fund fell 9.3% over the three months ended September 30, 2019. This compared to a decline of 1.3% for the S&P 500 Index. This is the second consecutive quarter in which the XLE has underperformed the overall market by approximately 8%. As is usually the case, one need only to look at the performance of oil prices to explain the poor stock performance.

Oil prices, as measured by the WTI November 2019 future price, declined 9.3% from $59.14 per barrel to $53.62 per barrel. The path downward, however, was anything but steady. Oil prices rose sharply in June and again in September to levels above $60 per barrel in response to tension in the Persian Gulf. Higher prices were short lived. Both times, oil prices sank $10 per barrel to a level in the low fifties in the three weeks following the rise. Natural gas prices, as measured by Henry Hub November 2019 futures, were essentially flat rising a modest 0.8% from $2.266 per thousand cubic feet (mcf) to $2.283 per mcf. This is not unusual during the summer quarter when there are few heating degree days.

Oil inventories continue to rise with the EIA reporting consolidated oil stocks of approximately 2 million BBLS (as of 9/27), up 1.7% from a year ago. Of note, domestic production rose approximately 15% year over year and net imports fell 33%. The EIA estimates that the United States could become a net exporter of energy in 2020. Rising domestic production, combined with concerns of a global economic slowdown, seem to be having a bigger impact on oil prices than political tension in the Persian Gulf.

The oil future’s curve is relatively flat at prices near current levels. Many energy companies took advantage of the oil price spikes to add to their hedge positions. For those who didn’t, the opportunity has passed. Longer-term oil prices do not show any relief to producers.

The current outlook for the energy sector remains somewhat negative. Companies are under pressure to lower their operating costs to justify production at $50 per barrel prices. Most companies try to limit expenses to a level within their generated cash flow. With prices down, that means cutting back on operating costs and capital expenditures. A prolonged period at prices near or below $50 per barrel could test the liquidity of companies with burdensome debt levels or high operating costs.

We remain cautious regarding energy stocks. We favor companies with low debt levels, high hedge positions and low operating costs.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
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Company Specific Disclosures

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ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of
transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public
appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.

NOBLE RATINGS DEFINITIONS	% OF SECURITIES COVERED	% IB CLIENTS
Outperform: potential return is >15% above the current price	86%	25%
Market Perform: potential return is -15% to 15% of the current price	14%	2%
Underperform: potential return is >15% below the current price	0%	0%

NOTE: On August 20, 2018, Noble Capital Markets, Inc. changed the terminology of its ratings (as shown above) from “Buy” to “Outperform”, from “Hold” to “Market Perform” and from “Sell” to “Underperform.” The percentage relationships, as compared to current price (definitions), have remained the same. Additional information is available upon request. Any recipient of this report that wishes further information regarding the subject company or the disclosure information mentioned herein, should contact Noble Capital Markets, Inc. by mail or phone.

Noble Capital Markets, Inc.
225 NE Mizner Blvd. Suite 150
Boca Raton, FL 33432
561-994-1191

Noble Capital Markets, Inc. is a FINRA (Financial Industry Regulatory Authority) registered broker/dealer.
Noble Capital Markets, Inc. is an MSRB (Municipal Securities Rulemaking Board) registered broker/dealer.
Member – SIPC (Securities Investor Protection Corporation)
Report ID: 11091