In the oil and gas debacle of 2014, many investors asked this one question. When are oil prices going to rise? We asked a different set of questions as deep value investors. Almost certainly, when one talks about ideas from the oil and gas sector, most investors were saying : stay away from that darn sector!
And of course, the contrarian in us made us look the other way. Like bomb sniffing dogs, we scoured the junkyards of the stock market for companies which were affected by the oil and gas fiasco of battered oil prices. The thing is that oil is an important commodity in the global economy. As such the price of this single commodity is capable of bring many oil and gas companies to its very knees.
Even the support companies such as those operating support vessels were hit.
But amongst the rubble, we found an undeniable gem, in our eyes mostly, not the eyes of the investing public. We bought the company at less than 4 cents per share.
And shortly thereafter, the price rose to around 7 to 8 cents in which we promptly sold out at about 6.5 cents. That was a profit of approximately 71% in less than 6 months.
The above screenshot is taken from our brokerage account. I have much more to write about here. I understand this is a penny stock that we are talking about here. As such many will be afraid to buy into a stock such as this. Another article perhaps on penny stocks.
The lesson here is a simple one for many aspiring investors. Be firmly bent on the contrarian approach. Some say the secret is in buying low and selling high. That to me is no secret. What is a low price and high price anyway? My approach of being contrarian is really to look at the numbers and buy these companies at less than the liquidation value, approximated by the net current asset value calculation.
In the case of Heatec Jietong, the price was less than 60% of the liquidation value. Buying sub liquidation value stocks really do work. For more of such information and in depth no nonsense articles and post. Also, my books on Kindle are a treasure trove of information and they only sell for 99 cents currently. Seize it when the risk reward ratio is in your favor! If you are interested, I refer you to the link here.
As always, may you be blessed with prosperity, health and happiness!