Camber Energy Stock Up 65% in September – Time to Buy CEI Stock?

The price of Camber Energy stock has gone up 65% so far in September after the company announced in late August that one of its majority-owned subsidiaries, Viking Energy Group, entered an exclusive agreement with ESG Clean Energy LLC to license its proprietary carbon-capture system.

For Camber, this license would translate into higher revenues for the firm in the future even though specific details about the deal were not provided in the press release that contained the announcement.

Can this positive development continue to lift the price of Camber Energy in the future? In the following article, I’ll discuss the latest price action while also taking a look at the firm’s fundamentals to possibly answer that question.

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Camber Energy – Technical Analysis

News about this licensing deal came at an interesting time for Camber Energy stock as the price had just broken below a long-dated support found at the $0.5 level. Following the announcement, the share price quickly bounced above this threshold and has now tagged a key resistance at $0.75.

Trading volumes have exceeded the daily average in almost every trading session that followed this news. This indicates that buying volumes have been steadily surging but could also lead to an exhaustion in the uptrend if bulls eventually run out of ammo.

At its current level, the share price is trading 74% above its 20-day simple moving average (SMA) and 61% above the 50-day SMA as well. Moreover, momentum oscillators like the Relative Strength Index (RSI) and the MACD are already flashing warning signals in regards to the stock being potentially overbought.

The risk of a sharp pullback for CEI stock seems elevated at the moment upon tagging this important resistance while some factors, including the firm’s inability to file its latest quarterly report on time, could play against the stock’s outlook if doubts about the accuracy of its financial reports emerge.

The management has cited the latest merger with Viking Energy Group as the reason for this delay in filing multiple 10-Q reports with the US Securities and Exchange Commission (SEC) as accountants continue to work to produce its consolidated financial statements.

Camber Energy – Fundamental Analysis

Camber Energy’s revenues were dropping before its merger with Viking, moving from $5.3 million in 2017 to less than a million by the end of 2020. Meanwhile, according to a press release from the company published in 17 August, Viking generated revenues of $21.2 million during the six months ended on 30 June 2021.

This results in a simple run-rate of $42 million in revenues for Viking for the full 2021 fiscal year resulting in a mild $2 million increase compared to the company’s 2020 top-line results of $40.3 million.

According to the company’s latest investor presentation, Camber’s management aims to generate value from this merger upon exiting some of Viking’s oil & gas asset. These assets include oil fields located in Texas and Louisiana.

At its current market capitalization of $86.2 million, the valuation of Camber Energy might not fully reflect its underlying value as the sale of Viking’s assets along with the future proceeds obtained from this latest licensing deal may exceed this market capitalization.

Meanwhile, according to its latest quarterly report, the company had no long term debt while it also announced in July this year that it had received a $15 million equity investment from an institutional investor.

All things considered, the net book value of CEI’s assets may already exceed its current market capitalization and the market could correct the company’s valuation once its latest quarterly reports come out.

That said, further delays in the publication of these results may result in volatile fluctuations in the share price as a result of speculative activity. Moving forward, the outlook for the stock based on the technical readings outlined above is bearish.

Since Camber Energy is a penny stock, investors should approach this issue with caution as they could experience heavy losses if proper risk management measures are not taken when trading CEI shares.

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