Low-Cost Stocks Under $3 with Potential for Double-Digit Growth by 2025

This article discusses three stocks under $3 with potential for significant gains by 2025. The first is Ring Energy (REI), an undervalued oil and gas company with a low P/E ratio and a high PV10 value compared to its market cap. Its prospects are buoyed by rising oil prices and anticipated interest rate cuts that could boost oil prices further. The article cautions against purely speculative low-priced stocks and emphasizes the importance of considering solid business fundamentals for long-term investment success.

In recent times, the global oil market has experienced a significant resurgence, with crude oil hitting a four-month high [1]. This upward trend is driven by a combination of factors, including anticipated interest rate cuts, geopolitical tensions, and a growing global economic recovery. As a result, investing in undervalued oil and gas stocks with solid business fundamentals could yield substantial returns in the long term. In this article, we will discuss three such stocks under $3, each with the potential to surge by 100% or more by 2025.

1. Ring Energy (REI)

Ring Energy (NYSE:REI), with a current market capitalization of $370 million, is a prime example of an undervalued oil and gas company. Its present value of estimated future oil and gas revenues (PV10), which stands at $1.65 billion, is significantly higher than its market capitalization [1]. Additionally, Ring Energy's proved reserves life of 19.6 years implies clear revenue visibility.

In 2023, Ring Energy reported revenue growth of 4% to $361.1 million and adjusted EBITDA growth of 21% to $236 million. With oil prices trending higher, the company is poised for healthy EBITDA and cash flow growth. Moreover, Ring Energy has pursued multiple acquisitions in recent years, which have contributed to production growth. With leverage at 1.62x, the company is expected to continue making opportunistic acquisitions.

2. Nordic American Tankers (NAT)

Nordic American Tankers (NYSE:NAT) is another undervalued oil and gas stock to consider. The company operates a fleet of large crude tankers and is known for its robust dividend yield. In the current market environment, with interest rates expected to remain low, NAT's dividend yield offers an attractive risk-adjusted return.

While Nordic American Tankers is not directly involved in the exploration and production of oil and gas, the company benefits from the overall health of the oil market. As such, a stronger oil market could lead to higher rates for its tanker services, contributing to revenue growth.

3. U.S. Oil & Gas (USOP)

U.S. Oil & Gas (USOP) is a small-cap oil and gas exploration company with a focus on the United States. The company holds leases in Utah's Uintah Basin, where it is exploring for oil and gas. While the company is still in the exploration stage, it has identified several prospects that could yield significant returns in the future.

Investors should note that while these stocks have the potential for substantial gains, they also carry higher risks due to their small size and speculative nature. As such, it's essential to conduct thorough research and consider the company's business fundamentals before making investment decisions.

In conclusion, the current oil market environment presents an opportunity to invest in undervalued oil and gas stocks with solid business fundamentals. Ring Energy (REI), Nordic American Tankers (NAT), and U.S. Oil & Gas (USOP) are three such stocks that could surge by 100% or more by 2025. As always, it's crucial to remember that investing carries risks, and thorough research and a long-term perspective are essential for success.

[1] Finance.yahoo.com. (2021, August 26). 3 Oil & Gas Penny Stocks to Watch as Crude Oil Prices Soar. Retrieved September 1, 2021, from https://finance.yahoo.com/news/3-oil-gas-penny-stocks-205416895.html