• Oil prices continue to surge as Russian oil exports may be banned.
• Low-cap oil stocks are targeted by retail traders as prices surge.
• HUSA stock is up over 100% in Monday’s premarket.

Houston American Energy Corporation (HUSA) is a small-cap oil stock that is generating quite a bit of interest on social media this morning. The stock has a market cap of about $19 million so is a classic penny stock play. Traders have seized on the latest spike in oil prices to target low cap energy stocks that can see huge price increases. 

HUSA Stock Forecast

This looks like a classic pump, so will it eventually get the dump? There is nothing wrong with trading a pump and dump, so long as you know what you are trading and manage your risk very carefully. When the music stops, it is time to get out quickly and move on. Otherwise, you can get wiped out. It is a clever play of retail traders to use the latest oil price surge to target low-cap energy stocks.

It is a similar playbook to the short squeeze frenzy from last year. In many cases, a lot of those short squeezes were short and fast and came quickly back down to earth. Houston American Energy Corporation is involved in the exploration and development of oil and gas, focusing mostly on Texas’ Permian Basin. The last set of results we see in the chart below to the end of 2020 showed revenue of just over $550k, so it is a small company.

At some stage, the party will end, and the crowd will move on. Just be aware and be prepared. Manage your risk or you could lose a huge part of your investment. This is a bubble in our view and unsustainable. Money can be made certainly, but more likely it can be lost in large amounts by a lot of people.

HUSA chart, daily