The crude oil market has been on a rollercoaster since Russia invaded Ukraine. And while this has meant that people are spending more on gas, traders benefit handsomely from the surge. Oil stocks are spiking, and penny stocks are usually the big movers.
If you want to bank during this hot sector, you must know the right oil stocks under $1 to watch and add to your portfolio. Penny stocks can provide a great way to get significant returns on small investments. However, it can be hazardous since penny stocks are notoriously volatile. Here are the top oil company penny stocks with the fastest growth, most value, and most momentum.
Ring Energy (NYSEMKT:REI)
Ring Energy, Inc. is an independent exploration and production company that manages oil and gas exploration, development, and production in Texas and New Mexico. The ring has been steadily growing its reserves and production capacity in recent years thanks to strategic acquisitions and drilling success.
In the third quarter of 2023, Ring’s sales volume has grown 2% to a record 18,292 barrels of oil per day from 17,856 barrels in the fourth quarter of 2022. Revenue surged 91% year over year in the third quarter of 2023.
PetroTal is a Canadian oil and gas company. It explores, develops, appraises, and produces crude oil and natural gas in Peru. The company’s income is generated from the sale of crude oil.
PetroTal’s earnings grew by 44.3% over the past year. Its lowest stock price was $0.50, and its highest was $0.82.
Vaalco Energy (EGY)
It’s rare to find penny stocks that pay dividends – and Vaalco Energy, a Texas-based company, shines bright. The company’s dividends rose to 5.63% in the first quarter of 2023, representing a 92% increase. In 2022, Vaalco Energy increased its year-to-year oil production by 43%. If fossil fuel prices spike again, Vaalco energy stock may be a great opportunity.
How to Invest in Oil Penny Stocks
Because of the volatile and cyclical nature of the oil industry, investing in oil stocks can be risky. While different industry segments come with unique risks, factors like geopolitics, economic growth, and capital allocation can significantly affect the industry.
The Organization of the Petroleum Exporting Countries (OPEC) plays a key role in oil prices. It causes major fluctuations in the price of oil through supply adjustments. Nonetheless, oil companies operating without connections to OPEC can also influence oil prices through capital allocation decisions that impact supply.
Because of the volatility of the oil industry, you should select stocks from oil companies that have these key characteristics.
- Cost control: They strive to maintain low operating costs or stable cash flow streams.
- Strong credit profiles: The oil company has a strong financial profile with access to affordable credit, investment-grade bonding ratings, and manageable debt maturities.
- Operational diversification: The companies have diversified operations by engaging in multiple activities or operating in multiple geographic regions.
The key to successfully investing in oil company penny stocks is to research and carefully analyze the company you are considering purchasing shares from. These actions can result in huge profits once the market hits bullish momentum.
When investing in oil company penny stocks, you need all the information you can gather. Penny stocks come with a sizable financial risk due to their volatility. Having a good penny stocks trading strategy and being able to identify top-performing penny stocks can help you generate tremendous amounts of returns. It’s important to diversify your investment in a way that reduces your overall risk, and this includes oil assets.