Trinidad Drilling Ltd (TDG.TO)

A good balance sheet, under 50 % debt. A big Canadian and big US presence. It is a very cheap stock. It is trading significantly below book value. (Analysts’ target: $2.67).

(A Past Top Pick on Oct. 6, 2017, Up 8%) Energy stocks are starting to rise and he likes. He's bullish on oil. Their debt is a little high and cash is a little weak. They're hiring outside consultants to resurrect the company which could happen. He likes the drillers and this is a straight-up play with US exposure.

(A Top Pick Oct. 6/17, Down 32%) Likes the drillers in general. Oil is holding well above $60, so there will be more spending from the majors and this in turn will benefit TDG. The current quarter didn't look so good, but the energy sector has stalled too. Actively gaining US exposure, such as a joint venture with Haliburton.

He likes it. It is in his action alert buy list. It is trading very, very cheaply. They are getting a lot of demand for their rigs. These stocks have been devastated and they have low debt. The balance sheet is in good shape relative to peers.

Bargains are in the natural gas side. This one is on his alert list. It was devastated in tax loss selling and has now recovered. He thinks it will get to a premium to book in Q3. They have low debt on the balance sheet.

If there is a big rally in energy this year all of the stocks will do well. He is looking at drilling companies as the next ones to get pricing pressure. He thinks they are next to go up and has held PD-T for a while. The US looks pretty attractive to him 6 months out.

It is on his coverage list. It was added to his action alert list this past week. They have 69 rigs in the US and 70 in Canada. They are doing very well. Even if they wrote down older portions of their fleet, they are still okay. The balance sheet is not bad. They are in good shape.

Drilling rigs in Canada and the US. It is trading cheaply, below book value. A lot of analysts are not bullish on day rates for rigs. That could change. The best rigs with the best crews will be put to use. He would prefer PD-T.

They have 70 rigs in Canada, 69 in the US and 11 in the middle east. The company did very, very well in the quarter. Under $1.50 after tax loss selling would be the time to buy it. (Analysts’ target: $2.80).

Drillers are cheap. You don't have to be a Bull on oil. They are trading at about 30% of replacement value. This company has shifted a lot of their rigs to the US. They are starting to generate more free cash flow. Thinks there is a lot of upside to the whole sector. (Analysts' Price Target is $2.78.)

They’ve done a good job in the past couple of years of migrating more to the US to the Permian Basin, giving them higher productivity and higher rates. They’ve done a few acquisitions giving them a broader product and services offering. Has a joint venture with Halliburton for international rigs. The biggest reason is that drilling stocks are trading at about 30%-35% of replacement value of the assets. They’ve always been a Buy at that level and a Sell at 70%-80%. (Analysts’ price target is $2.90.)

A lot of the drilling stocks are cheap. Book value is $4.99 so it is trading very cheap. It could go to a $1.20. During the next bull market it could be a $12 stock. You want to own it and sometime in the fourth quarter will be the time to buy it.

A merger between Precision Drilling (PD-T) and Trinidad (TDG-T)? Thinks you can make the thesis to own either one with a preference to pressure pumping, without necessarily making the bet that you are going to see M&A. The biggest argument is personalities.

As drilling comes back and becomes more robust there will be more prospects. If he was going to own a name here he would own PD-T. They are more diverse and have a better valuation.

$486 million of debt against $1.4 billion of equity, so they are doing quite well. Revenues went up 23% in the 1^st quarter, to $132 million, and they have an operating income of $48 million with a cash flow loss of $28 million, which was the problem. This company is a survivor. Very vulnerable when the industry turns south. You want to be able to buy when they are throwing them away. BV is $548 million, so it is already trading at a significant discount.