Could This Small Cap Share Go Blue Chip?

The typical Small Capitalisation Share costs only cents and has not been around long enough to make good profits or pay dividends. How can you pick a stock that can that can go from cents to dollars in a short time? It’s not easy! Most micro cent shares take years for the company to establish themselves, even in the case of miners and explorers. What you can find is a firm that has done the hard yards of building an exploration portfolio of mining or fuel areas and the share price has not yet caught up with their true value.

In the case of an oil exploration company it is necessary to have a claim area that has shown a good ratio of successful wells drilled and some producing wells. It needs to have large oil bearing potential targets of many millions of barrels of oil and drilling should be in the near future.

Nido Petroleum ticks all the right boxes. Last year Nido produced 800 thousand barrels of oil and earned revenue of $60 million but still made a large loss due to a write down of $47 million on the Tindalo oil field. The Tindalo field had extreme technical troubles and was abandoned even though it struck commercial oil. Excluding the write down Nido would have made $4 million profit.

Starting in the second quarter this year the company expects to drill 5 exploration wells with the first starting in May mostly financed by Shell. The well is in water about 1 km deep and should cost about $25 million to drill. The site has had all the latest tests seabed coring, seepage etc and Shell would not farm in if they did not think there was a good chance of success.

The oil field is estimated to contain 1 billion barrels of oil and with Nido retaining 35% of the field the present share price of 13 cents will take off like a rocket if the well is successful. Can you believe a company with this much potential would have such a low price?

This is still the norm for low capitalisation so called penny shares, there are many stocks under 5 cents that still have a good chance of being successful and of course starting from such a low price gives them the possibility of huge percentage gains. I can not recommend that you buy these shares I do not have a financial advisors license, but I do advise you to research this and other micro cent shares to try to find your own bonanza stock.

Of course I have invested in this and 40 other penny shares hoping for good profits from a low outlay. The past 2-3 years have been a disaster for low cost shares but I think the stock market is about to come good. Good Luck!

A timely follow-up to the bestselling classic Dividends Don’t Lie

In 1988 Geraldine Weiss wrote the classic Dividends Don’t Lie, which focused on the Dividend-Yield Theory as a method of producing consistent gains in the stock market. Today, the approach of using the dividend yield to identify values in blue chip stocks still outperforms most investment methods on a risk-adjusted basis.

Written by Kelley Wright, Managing Editor of Investment Quality Trends, with a new Foreword by Geraldine Weiss, this book teaches a value-based strategy to investing, one that uses a stock’s dividend yield as the primary measure of value. Rather than emphasize the price cycles of a stock, the company’s products, market strategy or other factors, this guide stresses dividend-yield patterns.

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Dividends Still Don’t Lie: The Truth About Investing in Blue Chip Stocks and Winning in the Stock Market