Question marks remain
Shares in Gulf Keystone Petroleum (LE: GKP) have been given a boost today, with the northern Iraq-focused oil producer rising by as much as 7%. This was caused by the announcement that Gulf Keystone has received a payment of $8m from the Kurdistan Regional Government (KRG) for oil exports in May. This represents partial payment of the invoiced amount, with the balance expected to be paid shortly.
Clearly, this is encouraging news for Gulf Keystone and with the price of oil having soared from a low of $28 per barrel earlier this year to as much as $50 per barrel, its long term outlook appears to be significantly brighter than it was a few months ago. However, this does not appear to be reflected in Gulf Keystone’s share price performance, with the company’s shares having fallen by 70% since the turn of the year.
While Gulf Keystone has a sound asset base and is performing well despite the geopolitical risks which it faces, there may be better options elsewhere within the oil and gas industry in my view. That’s because there remain question marks about the company’s financial standing and the fact that its locality is politically unstable.
A bright future
Also releasing news today was contract-for difference (CFD) specialist Plus500 (LSE: PLUS), which released an update on the potential impact on its business from Brexit. Clearly, in the short run, high volatility tends to be good news for spread betting and CFD providers, due to it encouraging greater interest in such products among investors. And with Plus500 recording record signups and new customers on the day following the referendum, it seems to have been a good thing for the business thus far.
Looking further ahead, Plus500 states in today’s update that the UK represented 15% of 2015 revenue, with the company having a diverse international customer base. And with Plus500 forecast to increase its bottom line by 20% this year and by a further 7% next year, it seems to have a bright future in my view. Furthermore, with volatility likely to remain high and Plus500 having a price-to-earnings growth (PEG) ratio of 1.1, I think that it offers a relatively appealing risk/reward ratio.
Growing bottom line
Meanwhile, the international defence, security, transport and energy group Ultra Electronics (LSE: ULE) also released an update today. It stated that it has experienced similar market conditions to those discussed in its February update. As such, trading has been in-line with expectations and it is on-track to meet full-year guidance. Furthermore, with order intake in 2016 being positive, Ultra Electronics has experienced an increase in order book value over the 2015 year-end position.
Looking ahead, Ultra Electronics is expected to grow its bottom line by 5% this year and by a further 6% next year. With its shares trading on a price-to-earnings (P/E) ratio of just 12.6, they seem to offer good value for money for long term investors in my opinion.
