BPZ Resources (BZP - Cramer's Take - Stockpickr), an exploratory stage company, explores for and produces oil and natural gas in Peru and Ecuador. It has been initiated with a hold rating. Strengths such as a solid stock-price performance, growth in earnings per share and expanding profit margins are balanced by deteriorating net income and weak operating cash flow.
For the fourth quarter, the company narrowed its per-share loss to 6 cents from 8 cents. For 2008, the market expects an improvement in full-year EPS to a 67-cent profit from a loss of 32 cents in 2007. Although BZP's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average, and its quick ratio of 0.85 is somewhat weak and could be cause for future problems.
Net operating cash flow has significantly decreased to a loss of $320,000 from the year-ago quarter. Shares have risen sharply over the past year, exceeding the rise in the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.