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2 growth stocks under £1

The market greeted half-year results from Ophir Energy (LSE: OPHR) this morning by pushing the shares up 2.7% to 77p after the oil and natural gas producer reported a 69% rise in revenue, helped by higher commodity prices.

The company remains lossmaking for the moment but has net cash of $130m and total liquidity (cash and undrawn debt facilities) of $415m. It’s cut its global workforce by 15% to save an estimated $10m-$12m a year and is intent on delivering “lower risk and quicker returns to Ophir’s shareholders.”

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Monetising 1bn barrels

Revenue of $181m forecast for the current year, on the back of reiterated company production guidance of 12,000 barrels of oil equivalent per day, falls well short of supporting Ophir’s market cap of £544m ($718m).

However, the company has substantial discovered resources in four core countries — Equatorial Guinea, Tanzania, Thailand and Indonesia — three of which are Ophir-operated and, with low development and production costs, are capable of delivering attractive returns without requiring higher commodity prices.

Ophir is focused on monetising these, with the priority for 2017 being to achieve the last primary milestone of project financing for its Fortuna FLNG Project in Equatorial Guinea, which it expects to conclude in Q4.

Well funded and with rising revenue from producing assets helping to support development of a geographically diversified net 1bn barrels of discovered resources, I see Ophir as one of the more attractive stocks to buy in this area of the market.

Remarkably cheap

AIM-listed Crossrider (LSE: CROS) is another company whose half-year results received a warm welcome from the market this week. At a current share price of 75p, the market cap is £106m and about half of it — $68.7m (£52m at current exchange rates) — is represented by cash.

In a research note paid for by the company, issued on the day of the interims, underlying earnings per share for the full year are forecast to advance 41% to 3.8 cents (2.9p), followed by a 71% leap to 6.5 cents (4.9p) next year. This gives a price-to-earnings ratio of around 25.9, falling to 15.3 (or 13.1, falling to 7.8, adjusted for the cash), which seems remarkably cheap for the tremendous growth forecast.

Controlling shareholder

Crossrider’s valuation looks hugely attractive but I note the company has a 73.4% controlling shareholder in Unikmind Holdings Limited and that “the entire shareholding of Unikmind Holdings Limited is held by a trust, the sole beneficiary of which is Teddy Sagi.”

Sagi did nine months jail time in the 1990s for “grave deceit, bribery and insider trading” after being found guilty of manipulating bond prices in Israel, but has since built a multi-billion dollar empire encompassing interests including gambling and money-moving software, ad tech and real estate.

He acquired Crossrider in 2012, moving it from being a nerdy pure technology start-up into the hot digital advertising space and floating it on AIM in 2014 at 103p a share. It made hay for a few years in what was then the Wild West of online advertising but like other companies in the sector, its revenues collapsed as the market underwent rapid technological and regulatory change, much of it due to advertisers realising they were often being ripped off.

Crossrider’s current transition and recovery, as a developer and distributor of digital products in the online security space, could pay off for investors. But personally, I’m avoiding it.

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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.

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