Are These 3 TSX Venture Listed Oil Penny Stocks Overvalued?

While it is true the oil market has seen some recent relief, investors should be wary of these three relatively overvalued oil penny stocks that trade on the TSX Venture Exchange

SmallCapPower | May 10, 2016: After looking at company fundamentals, we like to assign an intrinsic or relative valuation to it in order to pinpoint any price to value inefficiencies. Although the Canadian oil markets continue to be volatility, investors must not lose sight of the numbers. One metric we look for is the EV/Sales multiple, which takes a company’s enterprise value (EV) and compares it to its Sales figure. When compared to a broader sector peer group, this gives us additional insight on how much over or undervalued a company’s stock price is. We believe these three TSX Venture-listed oil penny stocks are currently overvalued by the market as they exhibit EV/Sales metrics far greater than their peer group.

Jericho Oil Corp. (CVE:JCO) – $0.53
Oil & Gas Exploration and Production

Jericho Oil Corporation, formerly Dakar Resource Corp., is a Canada-based oil company, engaged in the acquisition, exploration, development and production of oil properties. The Company operates in two business segments, which include acquisition of oil exploration and evaluation assets in the United States and Canada. Jericho has over 50% interest in oil-producing lease packages located in Kansas, USA (Kansas Properties) and consists of approximately 2,688 acres and 51 barrels of oil per day (bopd).

• Market Cap $26,011,739
• EV/Sales (LTM): 23.5
• Peer Group Median: 3.0
• Sales: $1,330,000

Leucrotta Exploration Inc. (CVE:LXE) – $1.41
Oil & Gas Exploration and Production

Leucrotta Exploration Inc. is an oil and natural gas company engaged in the acquisition, development, exploration, and production of oil and natural gas reserves in northeastern British Columbia, Canada. The Company is a Montney-focused producer with lands located in the Dawson-Sunrise area in northeast British Columbia. Its production is approximately 2,400 barrels of oil equivalent per day (boepd).

• Market Cap: $185,619,818
• EV/Sales (LTM): 18.8
• Peer Group Median: 3.0
• Sales: $9,890,000

Junex Inc. (CVE:JNX) – $0.435
Oil & Gas Exploration and Production

Junex Inc. (Junex) is a Canada-based junior oil and gas exploration company that is engaged in complementary activities, such as selling natural brine and providing oil and gas well drilling services. The Company holds exploration rights on approximately 5.2 million acres of land located in the Appalachian basin in the Province of Quebec. Its properties are located in sedimentary basins in the St. Lawrence Lowlands, on the Gaspe Peninsula, on Anticosti Island and in the Appalachian region.

• Market Cap: $26,250,749
• EV/Sales (LTM): 22.4
• Peer Group Median: 3.0
• Sales: 780,000

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