• Houston American Energy (HUSA) stock rocketed higher, but then coughed up half its gains.

• The company doesn't really deserve credit for the share-price rally.

• Investors should take profits while they're still available.

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Houston American Energy (NYSEAMERICAN:HUSA) stock doesn't have a good risk-to-reward profile at its current price point.

In the first quarter of 2022, we witnessed a repeat of market behaviors we saw a year ago. Specifically, retail traders were pushing low-priced stocks, representing previously under-the-radar companies, to dizzying heights.

Last year, this phenomenon was called the "meme-stock trade." It's a little bit different this year, as there's a commodities-market angle to it, but the ending is predictable — and it doesn't favor long-term investors.

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What's Happening With HUSA Stock?

Given its low price and the fact that the company was previously unknown to most traders, it's not unfair to call HUSA stock a meme stock.

Or at least, it's behaving like a meme stock. With no warning, the share price catapulted from $1 and change in February 2022 to $16.61 in March 2022.

Meme dreams often end in heartbreak, and HUSA is sticking to the playbook as it has already crashed to the $5 area. The main concern is that the stock is going to complete the "Eiffel Tower" pattern: Straight up, followed by straight down and back to the pre-pump price.

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It's fine to trade Houston American Energy shares for a quick "scalp" or short-term gain, if you're nimble enough to make money that way.

For long-term investing, however, it's probably best to stick to profitable companies. This is especially true when it comes to oil drillers, as it's a risk-fraught and highly competitive industry.

So, is Houston American Energy actually profitable? As the math will show, the answer is no. Furthermore, the one factor that's propping up HUSA stock isn't necessarily reliable.

It only requires some basic fundamental analysis to figure out that, as an investable business, Houston American Energy just isn't worth the risk.

Counting on One Catalyst

Here are a couple of bad signs. First, Houston American Energy's press releases page hasn't had any new releases since June 2021. Second, the company lists its most recent Form 10-K as covering 2020, and its most recent Form 10-Q as covering the quarter ended Sept. 30, 2021.