Opinions
Michael Smedley
Enterprise Group
E-T
WAIT
Jun 30, 2015
Stock price when the opinion was issued
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He’s been picking away at it. Great job of paying down debt to zero. A nimble little oil patch company. Business is picking up. Pretty cheap valuation, so you can accumulate it here. Something will happen, like the oil patch lighting up again. A rise won’t take 2 years, but perhaps in the next 6 months.
It is good value in the oil field services right now. It is a product driven company with very good margins. It rents generators to allow customers to power their sites with natural gas instead of diesel. This means costs and emissions are down. It has a 50 million market cap with management owning about 40%. There is little or no analyst coverage yet. He easily sees an upside over the next year of 50 to 100%. Buy 1 Hold 0 Sell 0
(Analysts’ price target is $1.33)E has doubled this year, bringing market cap to $91M. It remains cheap at 10X earnings. There has been no major news, but Q2 earnings were fine with EBITDA more than doubling and margins increasing. It got new coverage from Acumen Capital. It has leverage to large contracts. There has been some insider buying. With its small size and 35% insider ownership we do not want to underestimate its risks here, but its fundamentals look good, the balance sheet is OK and as small caps move towards $100M market cap they do tend to get more attention from investors. We would be OK owning a small position as part of an overall small cap allocation.
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Oil field services. Lots of respect for management. Tough business. Kept debt levels in check, bought back lots of stock. Electrifying well sites via natural gas instead of diesel (expensive and polluting). That decreases cost for customers. No dividend.
Fairly big move up this year, but still really attractive. Lots of runway. Increased revenue and earnings, really strong margins of around 40%. Trades around 7x.
The thing that strikes him about the chart is that it's gone parabolic. With stocks in the $2 range, technicals sometimes go out the window as the market begins to understand it. Thinks it's sustainable. Lots of support right around $1.60.
No reason to sell, but could have a really big swing due to the size of the company.
It has been an oil and gas services rental type of company but is on to bigger and bigger things. It supplies natural gas portable generators in remote locations and is pivoting into a play on AI centres where a lot of electricity is needed. It uses gas that would otherwise be wasted by natural gas producers. Buy 2 Hold 0 Sell 0
(Analysts’ price target is $2.78)In 2020, they launched Evolution Power Products, having the exclusive right to nat gas turbines, slashing customers' diesels costs to zero and reducing pollution. Demand is strong. (Customers get carbon credits as a result.) He expects E-T to triple earnings as business rapidly grows.
(Analysts’ price target is $2.78)
An oilfield services smaller player that really got hurt during the downturn. A nice little group of companies based in Western Canada. It is just behaving like most oil/gas stocks, but it is a services company.