The Motley Fool

Is it too late to buy IGAS Energy plc shares after doubling in 4 months?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Businessman leading a chart upwards
Image source: Getty Images.

A number of stocks have posted gains well ahead of the high-flying broader market in recent months. UK onshore oil and gas specialist Igas Energy (LSE: IGAS), whose shares have almost doubled since September, is one such company. Spreadbetting firm IG Group (LSE: IGG), which released its half-year results today, is another.

Is it too late to buy these soaring stocks? Or are recent gains just the start of a bigger multi-year rise?

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Responding to regulation

IG Group’s shares are little changed at 785p following today’s results, having enjoyed a strong run-up from 650p since a pre-close trading update on 5 December. In fact, this has been part of a longer rise since December 2016 when the threat of tighter regulatory controls initially caused a major share price crash for IG and its rivals.

Several announcements by regulators have caused some short-term volatility in the shares but the broad upward trajectory has continued. As the industry leader, FTSE 250 firm IG is well placed to pre-empt or adapt to new regulations. For example, it was able to respond to a recent fairly damning review of part of the contracts for difference market by the Financial Conduct Authority (FCA) with the statement: “IG believes that it complies with the applicable rules and FCA guidance and that this review has no new financial implications for IG’s business.”

Highly attractive valuation

Increased regulation could actually benefit the big players in the long run and IG’s half-year results today showed the business continuing to progress, with record revenue and profit for the period. City forecasts for the company’s financial year ending 31 May project earnings growth of over 13% to 52.4p a share, giving a price-to-earnings (P/E) ratio of 15. There’s also a very nice 4.6% yield from a forecast 36.3p dividend.

IG’s earnings multiple and yield strike me as highly attractive for an industry leader, which is also broadening its client base through the development of new products and services, and through the establishment of operations in new geographies. For these reasons, I rate the stock a ‘buy’.

Very buyable?

AIM-listed Igas Energy faced gale-force headwinds as a result of its high level of debt and the oil price crash of 2014. Indeed, so severe were these that, ultimately, the company’s very existence was threatened. A massive financial restructuring crushed existing shareholders but at least enabled the company to survive.

I turned bullish on Igas in June after its refinancing. I noted its transformed financial footing — net debt of $8m, compared with $122m pre-refinancing — and that the company was cash flow generative at the prevailing oil price. Also, that its shale development plan was well funded by its partners with a carried work programme of up to $230m.

Since then, it has released its half-year results and the price of oil has continued to recover (reaching over $70 a barrel recently). Management said that in addition to the carried work programme on its shale acreage, it now has capital to deploy in incremental growth projects across its conventional assets. It expects the latter to underpin increased production to 2,500 barrels of oil equivalent per day and operating costs of $25 a barrel in the medium term. As such, the shares of ‘New Igas’ continue to look very buyable to my eye.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.