Should you buy or avoid Gulf Keystone Petroleum Limited, IGAS Energy plc and Plus500 Ltd?

Gulf Keystone Petroleum(LSE: GKP), IGAS Energy(LSE: IGAS) and Plus500 (LSE: PLUS) were on my list of stocks to avoid for 2016. Have I changed my views yet?

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Gulf Keystone

Gulf Keystone was one of my stock's to avoid because of its high level of debt, the low oil price and payment uncertainties in Kurdistan where it operates. I thought the risk of a power shift to bondholders, with a severe equity dilution, or even wipeout, was far too high to consider investing.

The shares were 23p at the time, and are now 81% lower at 4.35p as the market has begun to price-in a debt-for-equity swap.

In its results in March, Gulf Keystone told shareholders that "obtaining alternative funding and restructuring the Group's balance sheet is essential to the Group's ability to continue as a going concern". In a strategic update in April, the company said it had entered into a standstill agreement with bondholders while discussions on a restructuring continued. An extension to the standstill agreement was announced in May, and a further extension (until 1 July) was announced yesterday.

Buying Gulf Keystone's shares has become ever more akin to buying a casino chip, so the stock remains on my 'avoid' list.

IGAS Energy

IGAS Energy may not have the geo-political risk of Gulf Keystone, but the UK onshore firm's high level of debt and low level of cash flow in the prevailing oil environment were enough to lead me to conclude that this was also a stock to avoid for 2016.

IGAS's shares haven't cratered to the extent of Gulf Keystone's, being 14% down from 17.5p to 15p.

However, as with Gulf Keystone, results in March saw IGAS warn on material uncertainty about "the Group's ability to continue as a going concern". And in an update yesterday, the company referred to "discussions with a number of potential investors", as well as "its leading bondholders".

A restructuring of IGAS's balance sheet is essential, and with the potential for a significant dilution to existing equity, I continue to see this as another casino stock to avoid.

Plus500

Plus500 operates an online trading platform for retail speculators to bet on the movements of currencies, commodities and so on. It ran into trouble last year over the inadequacy of its anti-money-laundering systems and procedures.

Prior to joining the AIM market, this Israel-based company had a history of serial failings, fines and warnings, and I wondered if an unsustainable cavalier culture was behind its growth and margins, which seemed almost too good to be true.

There have been further strong numbers from Plus500 this year, helped by market volatility, and the shares that I tagged to avoid at 366p have risen 65% to 605p.

However, I remain unconvinced that the company's business model and culture can deliver shareholder value over the long term, so I'll continue to avoid it. Many may disagree, and feel that this growth share on a trailing P/E of 10.5 and dividend yield of 5.7% (9.5% including a special dividend) is an unmissable bargain.

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G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.