The Razor's Edge

2-Year Price History

A Word Of Caution

Stocks trading for less than $1 are loosely termed "penny" stocks. United Fuel and Energy Corporation (UFEN) is selling for less than $1 per share. While, we stand by our ratings methodology for long term value investors, often times "penny" stocks will be more volatile. Because many "penny" stocks are lightly traded their stock price can fluctuate because of a single large trade. Also, there is generally less analyst coverage of such "penny" stocks and thus less information from which to base our rating.

Therefore, (and as always), check additional sources and available information regarding United Fuel & Energy Corp. before making an investment decision.

Ockham's Rating

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UFEN Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 5 years. For, UFEN the high and low end of the Price to Sales per share ratios are 0.14x and 0.06x respectively.

Notice that UFEN's current Price to Sales per share ratio is 0.03x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $0.60, UFEN is 72% below where we would expect to see it. This will beneficially factor into our final analysis of UFEN as it is not often that this stock sinks to these levels.

UFEN Cash Earnings

Cash (and the ability of a company to generate it) is a pivotal analysis at Ockham Research. With UFEN, we have found that we don't have as many years of positive Cash Earnings as we would like in order to run an analysis. When a company like UFEN has had several years of negative Cash Earnings mixed in with their positive years, it can be difficult to really get a good analysis of their potential. At Ockham, we always advise that Cash is key to any investment, so investors should consider the lack of positive years available as a signal that other types of analysis may need to be more heavily relied upon in UFEN's case.

UFEN Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely. As far as our investing methodology goes, it is not necessary to pay a dividend in order to get a favorable rating, so as for right now UFEN gets a neutral rating for the dividend portion of the model. The company is not currently paying a dividend nor have they in the fairly recent past.