This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Find Tomorrow's Multi-Baggers Today

Stocks in this article: ZTPG ZINC

ATP Oil & Gas (ATPG) should be on your radar screen. The market cap is now $115 million, with a current P/E of 1.3 and a forward P/E of 4. What I like most about ATP is the excellent management team, who along with employees own over 20% of the shares. ATP operates almost all its proved properties, which means the company has complete control on capital expenditures. The company operates exclusively in the Gulf of Mexico and the North Sea via a hub-type concept, meaning that all of its oil platforms are clustered together. Such an operating model is advantageous because it gives the company greater efficiency over its operations

ATP acquires properties no longer desirable by the exploratory firms and develops them. The success rate has been astonishing, and in 2008 the company replaced more than 200% of its production. At the height of the oil boom, shares overshot to $50 a share; today they have undershot to $3 a share. Even though the company has $1.3 billion in debt, most of it is due years from now, and the company has done a brilliant job of monetizing assets, including a recent $150 million partnership with a unit of General Electric (GE). Such deals reduced debt by more than $300 million in 2008. With great assets and great management team that eats their own cooking, this company knows how to make money, and more important, how to weather the storm.

Another small-cap, zinc producer Horsehead Holding (ZINC) is cheap by all standards of value. The company has a net cash position of more than $120 million against a market cap of $138 million. Like all things commodity-related, it's priced as if there will never again be demand for its products. But zinc is an essential component of tires, plastics, paints and pharmaceutical products.

In addition, the company is the largest recycler of electric arc furnace dust. EAF dust is a hazardous byproduct of mini-mill steel operators such as Nucor (NUE); recycling EAF dust eliminates costly landfill use by steel operators. With steel production sharply down, there is less dust and thus less to recycle for Horsehead. But at the current price, you are getting the business for almost free, with facilities that are worth almost a billion dollars to replicate even in today's depressed market.

One way to get back what we've all lost in this market is to exploit the best opportunities today that will reward the patient investor with triple-digit returns. It likely won't happen in six months, but with so much cash sitting on the sidelines, it won't take much to propel the prices of the names above. Anything goes in this market, and prices could continue to decline, so I would use the market declines to slowly build any position.


Please note that due to factors including low market capitalization and/or insufficient public float, we consider ATP Oil & Gas and Horsehead Holdings to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

This was originally published on RealMoney on March 10, 2009. For more information about subscribing to RealMoney, please click here.

At the time of publication, Gad was long ATPG and ZINC, although positions may change at any time.

Sham Gad is the managing partner of Gad Capital Management, a value-focused investment firm based in Athens, Ga. Gad has written extensively for The Motley Fool and was a securities analyst for UAS Asset Management, a small, value investment fund in New York City, in 2007. Previously, Gad managed assets for the Gad Investment Group.

Gad runs a value-investing blog inspired by the teachings of Benjamin Graham. Additionally, he is currently working on a value investing book to be published by John Wiley & Sons in the fall of 2009. Gad earned his BBA and MBA at the University of Georgia. Gad appreciates you rfeedback; click here to send him an email.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs