McCoy Corp. (MCB.TO)

A dividend suspension should certainly be viewed negatively. "Temporary" pauses have been known to last several years. EPS of 24c beat the 10c estimate, and revenue of $25.6M topped the $22.6M forecast. EBITDA of $6.5M came in 33% above expectations. MCB is preserving capital due to the Middle East conflict, with two-thirds of its backlog tied to the region. The company has also identified roughly $2M in cost savings through workforce reductions and other measures. The balance sheet remains reasonably sound, though trailing twelve-month cash flow has turned negative. While not catastrophic, its small size introduces additional risk, and investors will likely stay away during the ongoing conflict. They would rate it a HOLD given its cheap 6x earnings valuation, as the conflict will eventually resolve. Unlock Premium - Try 5i Free

They make oil wells safer and reduce labour there. Well run and no debt. Not well known. Will continue to win contracts.

MCB provides services and equipment to the energy sector, such as drilling equipment and replacement parts. It also makes heavy-duty trailers. It is small at a $116M market cap, and cheap at 11.5X forward earnings. It has a decent dividend yield of 2.1%, a small buyback policy, earnings growth is expected to be decent, and analyst estimates are rising. Profit margins are strong and rising, and debt levels are low. We think it looks interesting here, and we would be comfortable buying today, although it is a small name, and we would be mindful around position sizing. 
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A week or two ago, stock popped on excitement over a new product that will lead to some recurring revenue, cut costs, and improve safety. 2025 will be a good year, but product is still being tested and rolled out. Pivotal year will be 2026. Trades at only 6x PE, profitable, great balance sheet, well run.

Owns a small position. They're bringing a new software product to market that will save oil/gas companies money, but we'll see if they can execute. 

Small-cap energy services. Consistent operating results. Technology reduces labour requirements and improves worker safety. Unique recurring revenue component, which may start showing up Q1 or Q2. Small position. If you own, hold; if not, fine to buy here.

Most recent addition to portfolio. Believes lots of opportunity in energy services. Active in well construction (cheaper & safer). Attracted to the new product line that will offer recurring revenues. Expecting a re-rate on the stock price as a result. Pristine balance sheet, good management. Expecting further share price appreciation. 

MCB reported Q4 revenue of $19.7M, increasing 8% year-over-year from $18.3M in 2022. The increase in revenue was driven by strong demand for the newly commercialized smart products, particularly McCoy's Flush Mount Spider (FMS). MCB also reported net earnings of $2.7M, compared to net earnings of $7.3M in 2022, with the comparative period benefitting from a $3.9M gain on sale and leaseback of McCoy's facility in Cedar Park, TX, and $1.0M recovery of income taxes. MCB cited, "Though timing and product mix of customer purchase commitments may result in quarter-to-quarter fluctuations in revenues and gross margins, we anticipate sustained success beyond drilling activity cycles as adoption of our smart technologies continues to accelerate." We think this was an OK quarter as revenue growth was good and earnings seems to be impacted by one-time factors in 2022 but still did decline significantly. 
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(Market Call Minute.) An energy service company that is still struggling. There is quite a bit of value here, but it is going to take energy services as a whole to come back.

Longer-term out, over the next few years, he thinks you will be rewarded. Half their market cap is in cash. When the oil/gas sector hits bottom, their earnings and revenue pretty much collapses. Also, it is offshore and a lot of their south American stuff has hurt them. He expects that over the next few years things will come back and you will be handsomely rewarded. The next couple of quarters are probably not going to look good.

This services the oil/gas industry. Has some diversification in what it does. Extremely well-managed company. Feels they have taken corrective action given the environment they are in. If you own, he would not be selling.

(Top Pick Apr 21/14, Down 34.79%) When oil price cratered, it was time to get out. No debt and pays a dividend so now it is probably not a bad stock.

Had some good quarters and there were some analysts that got behind the story, but then they missed on a couple of quarters. Sell a lot of tooling equipment for offshore drillers. Pretty good value at these levels, but management has to show that they can start to grow earnings again. (He inherited a little when he took over this portfolio.)

It had a mishap with an ERP installation (software). These things are tricky to implement. It is a temporary problem and in the long term the ERP will increase profits. Next year will be very good for profits because they go into replacement parts.