Opinions
Bruce Campbell (2)
Trinidad Drilling Ltd
TDG-T
COMMENT
Sep 23, 2015
Stock price when the opinion was issued
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(A Top Pick November 9/17 Up 5%) The stock is benefiting from the Ensign bid at $1.68, but thinks it will need a $2.00 price per share to make sense. He would like to see the company remain independent. They have a strong management team. The company is moving more rigs into the US under term contract agreements. He has a $3.00 per share 12 month target price.
He would rather see this company stay independent--its metrics are better than either Precision or Ensign (the two companies bidding for Trinidad). However, he sees the combination of Trinidad with Precision is a good deal. He thinks Ensign might come back with a higher bid, creating a bidding rivalry. His price target is $7. If the company is bought by Precision, he would roll over, to become a shareholder of Precision. Note: Precision’s debt to equity is high, almost 1 to 1. Ensign offers a dividend but also has a much higher debt than Trinidad. Yield 0%. (Analysts’ price target is $2.34)
One of 2 premier drillers in Canada. Believes it will be a survivor and will thrive going forward. He would like to see some stability in the sector. Drillers and service companies are still getting a lot of pressure from the E&P companies to reduce their costs. That means smaller margins for the drillers and a lot of competition. This one has a lot of torque, so when things start to turn up, you might miss the first 10%-15% move in the stock price, but it will have lots of room to go. If you have a five-year time frame, now is probably a time to initiate part of your position.