Based in Texas, diversified energy and power solutions company Camber Energy < NYSEAMERICAN:CEI> is, in the wake of a geopolitical in eastern Europe, suddenly a darling on Wall Street. Or at least, retail investors seem to have fallen in love with CEI stock lately.
Before you jump on the Camber Energy bandwagon, though, you should ask yourself an important question. Can you handle the volatility?
Holding CEI stock when it goes up 10% in a day is exciting - no doubt about that. However, there are also days when the stock goes down faster than it went up.
Nimble traders may be able to catch the big moves and profit from the share-price swings. On the other hand, cautious shareholders should consider whether Camber Energy meets the criteria of a worthy long-term investment.
A Closer Look at CEI Stock
The history of CEI stock shows that it's capable of huge price moves. For instance, in late September of 2021, the stock catapulted from 66 cents to a 52-week high of $4.85.
This is a perfect example of how a low-priced stock can move very quickly. Yet, this is a double-edged sword as the downside risk is always present.
Shockingly, most of CEI stock's gains from September 2021 were lost by the end of the year. Fast-forward to March of 2022, and the stock was back on an upswing, but with unpredictable daily price moves.
The Camber Energy share price was slightly above $1 as of March 10. Going forward, the $1 level will be critically important. After all, the last thing that the shareholders want is for the stock to trade in pennies rather than dollars.
Very Speculative
Let's not mince words. Many amateur traders are focusing on Camber Energy not because they've researched the company, but because there's a wave of interest in small energy businesses.
Yahoo Finance's Ines Ferre summed up the frenzy surrounding Camber Energy and similar energy-sector names:
"... a common theme that you will see with these companies, they've been trading in the single dollar digits. They've been exploding on social media, on StockTwits, highly mentioned. They have been some of the top 10 retail trader names on Fidelity. Very speculative."
I agree wholeheartedly. Some retail traders want to make fast money while the oil price is going up. The problem here is that, if/when the crisis between Russia and Ukraine is resolved, the price of oil could fall sharply.
Retail investing commentator Matt Korhs made a similar point about CEI stock. As he put it, retail traders are "trying to play off the geopolitical developments."
In light of this, Korhs offered a timely warning. "If things were to calm down ... It’s one thing I preach, and I hope a lot of these people do, is [to be] actually locking in those gains," he suggested.
Where's the Transparency?
Even beyond the over-reliance on oil-price gains, it's difficult to invest in CEI stock with confidence because Camber Energy hasn't issued a quarterly financial report in a long time.
Research on a company's financials is foundational to informed long-term investing. Yet, Camber Energy is making this type of research nearly impossible, as the company's most recently published Form 10-Q (as far as I can tell) covers the three months ended Sept. 30, 2020.
That report revealed huge year-over-year revenue and net earnings losses. Still, that's no excuse for concealing Camber Energy's recent fiscal data.
The NYSE American exchange has even warned Camber Energy about the company's failure to file its 10-Q and 10-K forms in a timely manner. In a separate filing, Camber Energy cited "delays in assembling the financial information required to be reviewed by its independent auditor, and in completing the accounting of certain transactions affecting the registrant."
The Bottom Line
I don't often scold companies, but Camber Energy really needs to get its act together. The time for excuses is over; just file your financial forms already.
Ferre was 100% right to call Camber Energy and its peers "[v]ery speculative." Don't misunderstand - it's fine to trade very small amounts of CEI stock in the short term.
Over the long term, however, the future of Camber Energy remains unclear. This will continue to be a problem, unfortunately, for as long as the company stubbornly withholds its recent fiscal data.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content - and crossed the occasional line - on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
CEI shares were trading at $0.83 per share on Monday morning, down $0.09 (-9.82%). Year-to-date, CEI has declined -2.35%, versus a -11.55% rise in the benchmark S&P 500 index during the same period.
About the Author: David Moadel
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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