Opinions Stockchase Insights
TerraVest Capital IncTVK.TOPARTIAL BUYAug 14, 2023
Stockchase InsightsStock price when the opinion was issued
As of Jun 04, 2026. Market Open.
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It has done a phenomenal job of growing by acquisition. Its big advantage is it has really good costs to buy steel so steel company acquisitions are immediately accretive to earnings. The last quarter was a bit weaker than expected and there are not big volumes so it gets pushed around. There is lots of runway for growth.. It has very good management so he is looking to buy back into it.
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Premium contentOur PAST TOP PICK with TVK has triggered its stop at $112. To remain disciplined, we recommend covering the position at this time. This will result in a combined net return of 41%, when combined with our previous guidance.
Premium contentPremium contentTVK is a unique serial acquirer of energy assets that possesses a solid track record of growing nicely over the years. In the last five years, TVK managed to grow its topline and EBITDA by approximately 23% and 27%, respectively. Since going public in 2013, TVK has managed to compound capital at 42% per year, even more impressively than CSU during that period.
TVK is trading at 15.0x EV/EBITDA, a premium valuation relative to its own historical averages of around 8.4x. The company is not as cheap as it used to be, but that being said, we think TVK is still a solid compounder and it is not too late to own the name. However investors need to set realistic expectations as the prospective returns in the near term may not be as attractive as in the past.
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Has been watching for a while, and recently bought shares. Company has continued to grow. Recently did a large equity raise. Very well run. Good capital allocation skills. Will continue to own shares. Valuation is still good - room for growth.
Jordan ZinbergPremium contentGetting more recognition all the time, not done yet. Continues to execute really well. Acquire, integrate, grow earning. Repeat. Well managed. Strong insider ownership, and that bodes well for the growth of the company.
Bruce Campbell (2)Has been dormant for many years, but has been one of the best Canadian compounders. They're not in a high-growth industries, but TVK can make highly accretive acquisitions. Earnings power is high. Have a strong balance sheet and capital to deploy. Are very good at synergizing, but doubts they can be as accretive when buying larger companies. Is a solid hold.
Premium contentPremium contentPremium contentTVK provides unique storage and distribution processing equipment in the energy and related fields. Recently reported net income grew by 125% over the year allowing cash reserves to grow, while the company aggressively retired debt. It trades at 22x earnings and supports a 28% ROE. We recommend setting a stop-loss at $57, looking to achieve $91 -- upside potential of 26%. Yield 0.7%
(Analysts’ price target is $91.00)He could have made it a top pick. It is about $1 billion in market cap and has no analyst coverage. It provides storage tanks for the energy fields. It is active in acquisitions and they are very good stewards of capital. The ROC is over 20% every year. The P/E is now about 15.
Jordan ZinbergThe strength is a bit surprising considering financial terms were not disclosed on the acquisition. TVK is trading at 10.4x EV/EBITDA, the higher end of multiple averages in the last few years ranging from 6.3x to 10.4x, that said, fundamentally, it is not too expensive given the track record of capital allocation, and we are okay to buy some here (perhaps a quarter position) and average into the position over time. We would add more aggressively to the position if it drops below $60. Momentum is very strong but it is not likely to be a straight up move and some consolidation is to be expected.
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TVK’s growth was driven mainly through its acquisition strateg and it is now trading at 8.3x times' EV/EBITDA. In the 3Q, TVK’s revenue grew 4% to $150.4M, compared to last year of $145M and cash available for distribution also grew slightly by 9% to $13.2M compared to last year of $ 12.2 M. Growth was slower compared to previous quarters of more than 20%, but the deceleration in growth was expected after two booming years of explosive demand for oil and gas processing equipment and services. Overall, an okay quarter. It has no analysts and thus no estimates, but we are comfortable with the outlook.
The balance sheet is strong, with net debt of $250M and net debt/EBITDA is around 2.3x. TVK generated healthy cash flow which was mostly reinvested back into the business through acquisitions (TVK pays dividends but the payout ratio was only 17%). We like TVK, the company is trading at a reasonable valuation with a track record of growing EBITDA consistently while opportunistically buying back shares too, we expect TVK continues to demonstrate execution going forward, would be comfortable to average into the position over time.
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