The Motley Fool

One double-bagger growth stock I’d buy before IGas Energy plc

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.

Silhouette of an oil rig
Image source: Getty Images.

Shares of shale gas hopeful IGas Energy (LSE: IGAS) have risen by 84% from a low of 49p in just over four months.

It’s a strong comeback for a company that was forced into a painful refinancing in 2017. IGas now has backing from both chemicals giant INEOS and from oil and gas investor Kerogen Capital, which owns 28% of the group’s shares after pumping £29m into last year’s refinancing.

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!

Although this AIM-listed firm is a relatively small investment for both INEOS and Kerogen, both are credible investors with industry knowledge. Their support suggests to me that they see considerable upside potential in the firm’s assets.

An action-packed year

INEOS support means that IGas now has a carried work programme worth up to £183m. The company is hoping to drill two new shale wells this year, and further data is expected from a number of rivals also hoping to drill or frack UK shale wells.

Rising oil prices have also helped the group’s portfolio of conventional oil and gas wells. These are now producing around 2,500 barrels of oil equivalent per day, at a cost of about $25 per barrel. Group revenue is expected to rise by about 10% to £36m this year, and broker forecasts suggest a net profit of about £3m.

The speculative opportunity for shareholders lies in the shale exploration programme. In my opinion, success could easily result in rapid gains. But if early results from shale wells are disappointing, then I’d suspect the shares may decline.

In my opinion this situation remains highly speculative. I’d only be prepared to consider this stock for a small part of my portfolio.

One share I’d buy today

A stock I’d be happy to own in much larger amounts is Porvair (LSE: PRV), a specialist maker of industrial filters. This £243m firm has risen by more than 850% since the financial crisis, and has gained 85% over the last two years.

Today’s full-year results suggest to me that the group’s growth potential remains strong. Pre-tax profit rose by 16% to £11.7m last year, while sales were 6% higher at £116.4m. Earnings per share climbed 14% to 19.5p.

Although Porvair spent £11.4m on acquisitions and capital expenditure last year, the group still ended the year with net cash of £9.8m. That’s just £3.8m less than the £13.6m reported at the end of 2016, highlighting the group’s strong cash generation.

Quality at a reasonable price?

Porvair shares are up 3% at the time of writing, reflecting chief executive Ben Stocks’ view that the group has started 2018 with “a healthy order position and is trading well”.

The firm’s growth strategy is based on the principle that it will only sell products which require specialist skills to make, and which must be replaced regularly.

This approach appears to provide a high level of repeat business and attractive pricing power, due to limited competition. The Kings Lynn-based firm’s operating margins have now been stable at about 10% for the last five years.

Although Porvair stock may look pricey on 28 times forecast earnings, I believe this is a quality growth business that’s worth owning. I’d be happy to buy at current levels, with a view to averaging down during any future periods of weakness.

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

Roland Head no position in any of the shares mentioned. The Motley Fool UK owns shares of Porvair. 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.