Key Points
- Insiders are buying these small and micro-cap energy plays. They each have risks but provide ample opportunities to offset them.
- The energy market is supported by higher prices and an outlook for increasing prices over time.
- These stocks off yield, value, hyper-growth, and analysts support to help investors mitigate risk
The energy industry is supported by demand and pricing despite the murky outlook. We rely heavily on oil, and there is a finite supply of oil, and green energy isn't offsetting carbon-based energy fast enough to be effective.
Today, we’re looking at four small-cap plays the insiders are buying. Insider buying isn’t a guarantee of future investment success but a telling indicator that can reduce risk. Reducing risk is a primary concern for all portfolios, and it comes in many forms. These stocks have risks unique to each other but also offer opportunities for investors. The question is how they may fit into your portfolio.
Sable Offshore Focuses on California Oil
Sable Offshore (NYSE: SOC) is a speculative oil play focused on assets offshore California. The company came to market late in 2023 via a SPAC merger completed in February 2024. The completion resulted in a major purchase of shares by a director and the company president, which amounted to $63 million between them. Insiders own about 15% of the stock, and institutions own another 27%.
The company is not producing oil but is targeting its first production this summer. The company’s operations are centered in the Santa Ynez unit and the Los Flores Canyon Facility, which were shut down in 2014 due to leakage. The company is working to correct issues related to the shutdown, and permitting is underway. The asset has a solid production history and an estimated production lifespan of 50 years. One analyst rates this stock at Buy and sees it trading about 70% higher.
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Talos Energy Bought by Institutions: Market at Rock Bottom
Talos Energy (NYSE: TALO) is an integrated oil and gas operator headquartered in Houston with operations in Texas and surrounding areas. Insiders own a slim 0.77% of this stock and haven’t bought much for years, but it doesn’t matter. This company is 90% owned by institutions that continue adding to their positions. The latest activity is by Control Empressario de Capital, a Mexico-based hedge fund controlled by the Slim family. The Slim family owns about 20% of the company, a solid vote of confidence, with shares trading near a long-term low.
Insidertrades.com tracks eight analysts with ratings on TALO. They have the stock pegged at Moderate Buy and forecast it to trade at about 70% higher than now. Catalysts for the move include increasing carbon capture business and recent discoveries. The company discovered commercial quantities of oil and gas with its Sunspear exploitation well with production expected to begin by early next year.
TotalEnergies Trending Higher
TotalEnergies (NYSE: TTE) is an integrated energy company operating in Europe and globally. The company focuses on oil and natural gas production, carbon capture, renewable energy, and other green endeavors. Insiders own very little of this stock and have made few transactions for many years, but one recently popped up. A director bought 197,000 shares, which is significant because the stock is trending higher and on the verge of a new ten-year high. The move is supported by ramping production at key projects and news the company was “seriously” considering an NYSE primary listing. Analysts rate this stock at Hold and see it trading near fair value.
Riley Exploration Permian is a Deep Value
Riley Exploration Permian (NYSE: REPX) is a micro-cap energy play that makes money. Its online projects produce oil, drive hyper-growth, and create significant free cash flow. Trading at less than 5X its earnings outlook, it is a deep value compared to the broad energy sector.
Insider activity is mixed. Executives are selling with activities aligned with share-based compensation, a major shareholder is also selling, and another is buying. Alvin Libin is the CEO of private equity firm Balmon Investments. Institutional activity is bullish. Institutions own nearly 60% of the stock and have bought on balance for five consecutive quarters. Truist Financial is the only analyst to cover the stock, but they rate it at Buy and see it trading at about 80% higher.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Riley Exploration Permian (REPX) | $30.10 | -0.9% | 5.05% | 5.34 | Buy | $45.00 |
| TotalEnergies (TTE) | $54.20 | +0.1% | 4.52% | 7.69 | Moderate Buy | $74.50 |
| Talos Energy (TALO) | $8.98 | -1.3% | N/A | 16.63 | Moderate Buy | $16.28 |
| Sable Offshore (SOC) | $22.28 | +0.0% | N/A | N/A | Moderate Buy | $25.00 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
