Timing the market is one of the biggest challenges facing investors. Prices can appear to be low or high, but then continue to follow their trend in the short run. This can lead to high volatility as well as paper losses – or the opportunity cost of missing out on a bull market.
As such, focusing on time in the market may be a better strategy to pursue. This may provide an investor with the opportunity to benefit from gradually improving performance recorded by the company in question. With that in mind, here are two smaller companies which seem to be making encouraging progress with their strategies. Is now the right time to buy them?
Reporting on Friday was European oil and gas exploration company Ascent Resources (LSE: AST). The company updated its investors on the progress towards the commencement of export production from the Petisovci asset to INA in Croatia. Following an update on 28 September, the process of recertifying the export pipeline by the Croatian government has taken longer than expected. The company now expects an exchange of signatories between INA and the Croatian authorities in a short timeframe.
Once this final step has been completed, the company will begin to export gas production. This could have a positive impact on its share price performance and help its valuation to rise even further following a 96% increase during the last year.
Clearly, the company’s share price is highly dependent upon news updates in the short run. Delays could hurt its performance and lead to a decline in investor sentiment. However, with Ascent Resources on the cusp of beginning export gas production, now could be the right time to buy it ahead of potentially improved financial performance in future years.
Also offering a potential investment opportunity for the long run is oil and gas exploration and development company Soco International (LSE: SIA). The company is expected to grow its pre-tax profit from £4.4m last year to over £21m in the next financial year. This could help to improve investor sentiment in the stock after what has been a challenging 2017 so far. Its valuation has fallen by 27% since the start of the year, with there being little sign of a potential turnaround.
However, with the price of oil rising this year and there being a prospect for a higher oil price in future, now could be the right time to buy Soco for the long run. Investor sentiment towards the wider oil and gas sector may be given a boost if OPEC supply cuts and higher demand cause the price of oil to rise.
The company may trade on a forward price-to-earnings (P/E) ratio of 110, but with its rapid growth prospects it could deliver impressive share price performance. As such, it appears to offer upside potential for the long run.
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Peter Stephens has no position in any 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.