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Money Morning's "unloved" pick of the week is oil and gas explorer and producer Northern Oil and Gas Inc. (NYSE: NOG).
An unloved investment is one that's been beaten down – but is actually a great value. Investors then get an amazing entry point into a good long-term investment.
With the recent plunge in oil prices, Money Morning Chief Investment Strategist Keith Fitz-Gerald has been on the lookout for beaten-down bargains. And he believes NOG stock fits the bill.
Northern Oil and Gas: About the Company
Northern Oil and Gas is a small-cap ($365 million) company founded in 2006. Its focus is the oil and gas reserves in the Bakken and Three Forks formations stretching across parts of North Dakota and Montana. NOG owns about 185,000 acres in those formations.
Northern Oil and Gas uses the "non-operator" model. That means it works with partners to drill and operate wells on the land it owns. NOG pays a percentage of the expenses of running the well and gets a percentage of the profits. Headquartered in Wayzata, Minn., the company employs about 20 people.
Northern Oil and Gas (NYSE: NOG) Stock: Why It's Unloved
The almost 50% fall in oil prices since June has crushed many of the U.S. shale oil and gas producers. NOG stock has been hit especially hard. From a 52-week high of $17.43 on June 23, NOG stock plummeted more than 72% to its 52-week low of $4.79 on Dec. 16.
Critics saw the non-operator model as a disadvantage. Then the analysts piled on.
Global Hunter Securities downgraded NOG stock on Dec. 2, followed three days later by Iberia Capital. Wunderlich Securities downgraded NOG on Dec. 16.
That got the attention of the short sellers. By mid-December, short interest had grown to nearly 27% of the float.