TRADE INSTRUCTIONS
Date: February 23, 2017
Name: Jones Energy
Symbol: JONE
Type: Open
Limit: Buy below $4

TRADE TARGETS
Holding Period: 6 months
Target Return: 50%
Annualized Return: 100%
Target Price: $6
Stop Loss Level: $3.15

COMPANY DESCRIPTION
Jones Energy, Inc. is an independent oil and gas company engaged in the exploration, development, production and acquisition of oil and natural gas properties located primarily within the Anadarko and Arkoma basins of Texas and Oklahoma. The Company’s oil is generally sold under short-term, extendable and cancellable agreements with unaffiliated purchasers. Approximately 25% of its total estimated proved reserves consist of oil, over 32% consist of natural gas liquids (NGLs) and over 43% consist of natural gas. Link to company website.

TRADE RATIONALE
Some of you have requested a low-price stock trade that might deliver the type of triple-digit annualized return that many of our options traders have been realizing on our recommendations, so this one’s for you! At a share price of less than $4, this stock has the potential to deliver a big percentage gain if our thesis pans out.

Our Rapid Profits Matrix has identified JONE as an undervalued, small-cap growth stock that could quickly escalate in value if crude oil prices break above $60. Since the “summer driving season” is still 3+ months away (despite today’s 70 degree weather here in Washington DC!), I’m putting a 6-month hold on this position. JONE is more levered to spot oil prices than most producers given its reliance on short-term contracts. For that reason, to a large extent this trade is essentially a bet on the near term direction of oil prices.

JONE is scheduled to release its next quarterly earnings report the second week of March, so we may see some price movement then. Last week the company released guidance for 2017, and presumably company management is intelligent enough to under-promise and over-deliver so we may get a small surprise to the upside then.

NOTE: JONE is optionable, but trades on very low volume so use limits when placing orders.