I think the Premier Oil share price (PMO) is too cheap to ignore now

The Premier Oil share price (PMO) has crashed, recovered, plummeted in 2020, and it’s on the up again. Is it a share to buy or sell now?

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’ve had something of a love/hate relationship with Premier Oil (LSE: PMO). Yes, I know, I should never get emotionally attached to a stock. And I do try not to, honest. But the Premier Oil share price has had me swinging between excited optimism and despair for a few years now. Let me tell you my tale.

I bought back in September 2015, close to the depths of the last oil price crash. The PMO share price looked a good choice for the recovery I saw as inevitable, and I plonked down 99p per share. By January, the price had crashed to just 19p and the shares were suspended. Got the timing wrong again, idiot!

Up, down, up…

Once trading recommenced, the price started to pick up and I held on. But by December 2019, after a roller-coaster ride, I decided I’d made a mistake. I’d abandoned my mature safety-based strategy in pursuit of the riskier growth stocks I favoured in my youth. So I got my act together and sold, at 89p for a loss that wasn’t too painful, and vowed never to care about the Premier Oil share price again. Of course, it promptly climbed to 120p in January. There’s my terrible timing again.

But then the Covid-19 pandemic led to a stock market crash and a new oil price slump. And the PMO share price plunged again, falling as low as 10p. Phew, lucky timing for once, and I breathed a sigh of relief. Now, surely, I can forever put Premier Oil out of my mind.

Premier Oil share price

Except I can’t. I love a twisty turny stock story. And I owe it to myself (and my readers) to keep my thoughts updated. It’s educational, see, to keep up with our failures and make sure we never forget the lessons. So what do I think now, with the Premier Oil share price all the way back up to 52p again?

Well, I won’t buy-in again myself. That’s because Premier Oil really doesn’t fit my strategy. But if I were 30 years younger? With more time ahead of me to make and recover from mistakes in the pursuit of big growth opportunities?

I only see two likely outcomes for the Premier Oil share price now. Either the company will collapse under the weight of its debt and the price will drop to zero. Or it will survive, will get back to chipping away at that debt, and the PMO share price will climb over the long term.

Survival or bust?

Which will it be? Much like my thoughts on Tullow Oil a few days ago, I’m optimistic again. As recently as this month, Premier told us its plans to acquire assets from BP were going ahead. It will fund part of that from a new share issue, so there’ll be a little dilution, But that’s definitely not the action of a company circling the drain.

Premier also has proposed amendments to its credit facilities in the pipeline, but there seems to be little urgency there.

So yes, I see the Premier Oil share price as a promising buy right now, if still risky.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft 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.

More on Investing Articles

Young Asian man shopping in a supermarket
Investing Articles

I’d shun Lloyds Banking Group and consider this stock for passive income instead

This company's dividend record knocks spots off Lloyds Banking Group's, and it looks like decent value now with a yield…

Read more »

Investing Articles

Will the 5.6% BT Group dividend yield grow in 2024?

Zaven Boyrazian explores whether BT Group can continue hiking its dividend and if the telecoms giant belongs in his income…

Read more »

Investing Articles

FTSE 100’s near a 52-week high, but this stock’s still dirt cheap!

The FTSE 100's on the rise, but not all stocks have been so fortunate. Here’s one company that got left…

Read more »

Investing Articles

Is this ‘secret weapon’ a multi-billion pound reason to buy Lloyds shares?

Dr James Fox explains how Lloyds shares could rise even higher as the bank's 'strategic hedge' is likely to boost…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

3 of the best penny stocks for growth, dividends, and value!

Looking for top penny stocks to buy? Royston Wild believes these UK small-cap shares could prove lucrative investments in the…

Read more »

Investing Articles

How I’d aim to turn an empty ISA into £275k by purchasing cheap shares this summer

Harvey Jones is taking advantage of the summer stock market lull to buy cheap shares and build a high and…

Read more »

Investing Articles

What’s the minimum I need to invest every month to earn a meaningful passive income?

When looking to secure a stream of passive income it's important to be realistic. Our writer investigates a strategy to…

Read more »

Investing Articles

These 2 great value income stocks could help me get rich and retire in style

These two FTSE 100 income stocks have terrific track records of dividend growth and Harvey Jones wants them in his…

Read more »