When you start the year at $12.63 and you’re penny stock is now trading at -92.30% below your 52 week high of $20.90, its hard to not be considered one of the cheap stocks. Houston American Energy Corp. (NYSE MKT: HUSA) heads into the last day of May trading just 11 cents above its 52 week low. Oil stocks have had it rough this month, especially since HUSA was upgraded twice by Wall Street Analysts during May. HUSA traded 404 thousand shares in the last session before closing 1 cent above its LOD at $1.61. HUSA stock is set to open the last trading session of May at -25.26% below its 50 day moving average, -81.46% below its 200 day moving average, and just 7.33% above the 52 week low set earlier this month of $1.50.
So, is HUSA worth adding to the list of penny stocks to watch considering it was over $20 a share 11 months ago?
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HUSA Stock Chart
Market Cap: 60.16M
Price/Sales (ttm): 46.14
Price/Book (mrq): 1.87
(Jul 7, 2011): 20.90
(May 17, 2012): 1.50
50-Day Moving Avg: 2.15
200-Day Moving Avg: 8.69
Avg Vol (3 month): 1,035,690
Avg Vol (10 day): 834,171
Shares Outstanding: 37.36M
% Held by Insiders: 42.27%
% Held by Institutions: 31.60%
(as of May 15, 2012): 2.24M
Houston, We Have A Problem
HUSA broke its first leg on March 1 when they announced delays in one of their Colombian wells stating that further analysis of the well’s potential would be forthcoming. Impatient and demanding immediate results, HUSA shareholders dumped dropping the stock price from $10.84 to $7.00. What happened next is so ridiculous that you have to wonder what is in water they drink down at Houston American Energy headquarters because it sure isn’t Tang.
On March 16, the Company’s CEO, John Terwilliger, attempted to rally HUSA shareholders by responding to message board rumors of bankruptcy by replying to them stating the rumors “are wholly unfounded” and that the company has “a valuable portfolio of prospects.” What an idiot! What CEO is dumb enough to respond to a message board rumor? Only the message board of Atrinsic Inc. (OTC: ATRN) is dumb enough to concoct something as stupid as that.
April was no better as on the 19th, HUSA broke its other leg when the Company announced it was ceaseing efforts to test and complete the C7 and C9 formations in the Tamandua #1 sidetrack well and the well was deemed non-commercial, possibly from formation damage while drilling. Then, the Company publicly admitted that was in possession of not 1, not 2, but 3 subpoenas from the SEC for testimony from the CEO, CFO and for delivery of certain documents. That bashed the shares even further down from $3.50 to the $2.25 range and opened the flood gates for every ambulance chasing class-action attorney in the yellow pages.
HUSA Doing The Texas Two-Step
Despite every stock fraud attorney wanting to file a case on behalf of HUSA shareholders, May seemed to have begun the cleansing of the financial voodoo the Company has subjected itself to for the last year. On the 4th, HUSA was upgraded by Wall Street analysts at C.K. Cooper from a “hold” rating to a “buy” rating and issued a $4.00 price target. On the 8th, the Company closed on a $13.14 million direct offering for 6.2 million units at $2.12 per unit, with each unit consisting of one of the Company’s common shares and one warrant, at an exercise price of $2.68 per share, to purchase one common share. Why dilute your shares further sinking your own stock again by selling additional shares?
On the 10th of May, the company filed their Q1 10-Q which reported revenue growth compared to the same period the year before as well as a roughly $20 million impairment charge for the well that was cluster-f#@ked by the company. On the 18th, Houston American Energy announced that drilling operations commenced on the Cachirre #1 well, its second well on the CPO 4 block in Colombia. And finally, on the 29th, Wall Street analysts at Canaccord Genuity initiated coverage on HUSA setting a “buy” rating on the stock.
The glimmer of light that shines for HUSA is that the Company reported Oil and Gas revenues for Q1 of $320,510 compared to $124,303 for the same period the year prior. Besides that, John Boylan, one of the Company listed Directors, recently purchased 46,003 shares of HUSA stock: 30,003 at $1.6167 and 16,000 at $1.65.
To view the SEC filings for HUSA, click here.
Bottom Line: HUSA is on the list of penny stocks that should return to the $20 level right around the time that Bryce Harper, the new face for MusclePharm Corp. (OTC: MSLP), gets inducted into the Baseball Hall of Fame. The Company is expecting their new well to spud sometime in June to early July which probably will not be able to overpower the SEC subpoenas Terwilliger & Co. are holding.
HUSA Stock has Resistance Points at 1.67 and 1.72 and Support at 1.58 and 1.54. Look for HUSA to hit 1.50 before making an entry.
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