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Forget the Bitcoin price. Here are two investments I’d buy instead

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Cryptocurrency investors have enjoyed modest gains this year. But the Bitcoin price is still more than 50% lower than it was one year ago. And as far as I can see, the outlook is very uncertain.

I believe there are far greater opportunities to get rich in today’s stock market. In this article I’m going to look at a pair of stocks I believe could provide smashing gains and a generous income.

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This stock could double

If you’re looking for a potential double bagger, then I think North Sea oil producer Enquest (LSE: ENQ) is worth considering. The firm’s shares are up by 12% at the time of writing after its 2018 results revealed a 48% rise in oil and gas production last year.

Increased output combined with higher oil prices to lift the group’s revenue by 89% to $1,201m. In turn, this helped the group to return to profit and cut net debt by 11%, to $1,774.5m.

I believe this combination of debt reduction and rising production provides investors with a potential opportunity.

Even after today’s gains, Enquest shares still trade on just 5.2 times 2019 forecast earnings. The main reason for this is that the company’s market value of about £300m is dwarfed by its debt commitments, leaving shareholders in a risky spot.

However, the firm’s latest guidance for 2019 indicates that net debt should fall from about 2.5x EBITDA (earnings before interest, tax, depreciation and amortisation) towards 2x EBITDA by the end of this year.

Production is expected to rise by a further 20% in 2019, to between 63,000 and 70,000 boepd. If Enquest can deliver this combination of higher output and debt reduction, I would expect a significant increase in the stock’s valuation in a year’s time.

I think gains of 50%-100% are realistic from this level, assuming the price of oil remains stable. Although debt-laden firms always carry some extra risk — any problems will hit shareholders first — I rate Enquest as a speculative buy at 20p.

The world’s biggest electricity producer?

Demand for oil seems unlikely to keep rising forever, as the world’s transportation system becomes increasingly electrified.

Luckily, oil and gas giant Royal Dutch Shell (LSE: RDSB) is already making preparations for the next stage of its evolution. Maarten Wetselaar, the group’s director of gas and new energies, recently told the CERAWeek energy industry conference in Houston that the company believes it can become “by far the biggest power company in the world”.

Mr Wetselaar’s argument is that Shell’s huge, low-cost gas reserves, its operational experience and its global infrastructure mean that it’s well equipped to become a giant supplier of gas and renewable energy.

The company is starting to spend money on renewables and related technologies. It expects to ramp up spending when it’s proved how this business could work. In the meantime, Shell’s oil operations are being run to maximise cash generation, with limited expansion.

This business delivered free cash flow of $39bn last year. Much of this is being returned to shareholders, thanks to a generous dividend and a $25bn share buyback programme that’s expected to complete in 2020.

I see Shell stock as a super pick for income investors at current levels. Trading on 12 times 2019 forecast earnings and with a 5.7% dividend yield, I rate this as a low-risk buy.

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Roland Head 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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