A stock that has been making me a lot of money recently and is a stock you should be watching is a small stock not many know about. Pyramid Oil Company ( PDO ) is engaged in the exploration and development of crude oil and natural gas primarily in California.
When I go long stocks, I demand major growth, and I have that here. However, this is not the most safe position. Making sure that your style matches this style is very important before going long this gem.
Growth is the most important thing for me as EPS and sales growth have proven to be the major driver behind the best stocks ever. When it comes to EPS and sales growth, PDO has it covered. EPS growth has been 89%, over 999%, and over 999% the past three quarters. Sales growth has been 1%, 49%, 61%, and 92% the past four quarters.
This growth gives it a steady EPS growth rate of 39% with a P/E ratio of 29, which is in the mid range of the 3-50 zone of the P/E level the past five years. However, P/E ratio has never proven to correlate to history's biggest winners. EPS and sales growth have proven to be more important.
Other areas that light up a major interest for me about this stock is that management still owns 63% of the shares outstanding, which means that they are still highly invested in this company and expect higher growth. Even though there is only one mutual fund involved in the stock currently, I am sure that as the growth continues to increase we will see a lot more funds get involved in this high quality stocks.
The ratings in IBD are incredible with a 97 EPS rating, 99 group RS rating, a 99 RS rating, an A for SMR (sales, profit margins, and return on equity), an A for accumulation/distribution, a 99 for composite rating, and an A for timeliness rating. It simply doesn’t get any better than that.
I already have a 98% gain in the stock from my first purchase, but I do want to buy more of this stock and will pick up more if it can either create a base lasting five weeks and then break out on huge volume, or if it can pull back to the 50 day moving average and then bounce on strong volume.
Even though I use technical analysis (click to enlarge image) to make my actual purchases, you are more than welcome to tackle the stock any way you like. I am just bringing to your attention a potential future monster stock. Fundamentals account for 80% of the reason for me to go long a stock, but I have found technicals are best for me when deciding to actually take the trade.
Disclosure: I am long PDO.
$36.0 (06/28/08)
