Bottom Fishing: Comstock Resources a value pick? $CRK

by royalarse13

*Originally published on 7 Feb 2013, for an update on 16 Mar 2013 please click here.

The idea behind this trade is buying an out-of-favour security with a reasonable probability of turning their string of quarterly EPS losses into gains in 2013.

Comstock Resources is an oil and gas company in the energy-production friendly US jurisdiction with all of their assets on-shore.  The stock traded around $30 for most of past 6-7 years despite a brief rip to ~$90 during 2008 oil rally.  Technically it is setting up a nice pattern for a long entry with well-defined buy/stop loss levels.

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The fundamental case has both pro’s and con’s.  Asset quality is average-to-above average, but cash flow has been negative and they are indebted heavily.  If they can get their operations in order the consensus sees profits in 2013 which could be a major upside catalyst.  
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Disclaimer: No position in $CRK.  This is not investment advice.  Do your own research and consult with a qualified investment professional before purchasing any security.  The purpose of this post is to encourage discussion about the merits of bottom fishing and/or value investing and is for educational purposes only.  

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