Forbes Energy Services Ltd. (NASDAQ:FES) has staged a massive reversal since breaking out of a bullish wedge and climbed above its 10 weekly moving average. The stock has tripled since breaking out of its wedge and is up 150% since breaking above its 10 weekly moving average on a surge in volume. The stock still has plenty of room to run and could double again from current levels.
Forbes Energy Services Ltd. (NASDAQ:FES) stock price has collapsed with the crash in oil prices. FES traded as high as $12 when it first came on the scene and is down over 93% since those levels were seen in 2011. The company is in penny stock land and will need to recapture the $1 area to become compliant with NASDAQ listing requirements. In addition, the market value of the company is well below the requirements of $5 million (currently at $3 million). If it doesn’t recapture $1 share price and $5 million market cap, FES will either have to do a reverse split or it will have to delist to a lower exchange like the OTCBB. Several funds have been decreasing their position in FES and others completely liquidating their stake and walking away from FES.
From a technical chart perspective, the massive surge in volume is very bullish and the breakout of its wedge and 10 weekly moving average is a good short-term indicator (confirmed by volume on the breakout). The stock could easily advance to the $1.00 – $1.50 range in short order. FES has over $85 million in cash which is more than enough to meet its current liabilities. It does have a crushing debt load that will be hard to service if revenues continue to deteriorate. However, on a bright spot, oil prices have turned around which should bode well for the industry if it can maintain or see a continued increase in oil prices.
Most analysts rating on the stock are sell and some even registering a strong sell. On a bullish front, the stocks volume has been increasing over the last month which is a positive development. Without volume, the share price cannot advance nor have a sustained advance. On Friday, over 800,000 thousand shares traded hands which is roughly 8 times average daily volume.
Forbes Energy Services Ltd. (NASDAQ:FES) provides a range of well site services for oil and natural gas drilling and producing companies to develop and enhance the production of oil and natural gas in the United States. The company operates in two segments, Well Servicing and Fluid Logistics. The Well Servicing segment offers well maintenance services, including remedial repairs, and removal and replacement of downhole production equipment; well workovers, such as downhole repairs, re-completions, and re-perforations; completion and swabbing services; plugging and abandoning services; and oil and natural gas production tubing testing services.
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FES is currently trading at a $16.49 million market valuation. The stock chart is been developing in a bullish way with several breakouts including wedge, weekly moving averages, and volume. As of 3 months ending September, the company had approximately $3.58 cash per share. Much higher than the share price of $0.58.
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Disclosure: we hold no position in FES either long or short at the publication of this article and we have not been compensated for this article.