Undervalued energy companies are those that trade at a price lower than their actual values, such as SandRidge Mississippian Trust I and ECA Marcellus Trust I. Investors can determine how much a company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
SandRidge Mississippian Trust I (NYSE:SDT)
SandRidge Mississippian Trust I, a statutory trust, holds royalty interests in specified oil and natural gas properties located in the Mississippian formation in Alfalfa, Garfield, Grant, and Woods counties in Oklahoma. SandRidge Mississippian Trust I was established in 2010 and with the company’s market capitalisation at USD $25.20M, we can put it in the small-cap stocks category.
SDT’s stock is now trading at -66% beneath its value of $2.63, at the market price of US$0.90, based on its expected future cash flows. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. In addition to this, SDT’s PE ratio is trading at around 4.13x relative to its Oil and Gas peer level of, 12.43x meaning that relative to other stocks in the industry, you can buy SDT for a cheaper price. SDT also has a healthy balance sheet, with short-term assets covering liabilities in the near future as well as in the long run. SDT has zero debt on its books as well, meaning it has no long term debt obligations to worry about. More on SandRidge Mississippian Trust I here. NYSE:SDT PE PEG Gauge Apr 17th 18
ECA Marcellus Trust I (NYSE:ECT)
ECA Marcellus Trust I owns royalty interests in producing and development horizontal natural gas wells for Energy Corporation of America (ECA). ECA Marcellus Trust I was started in 2010 and with the company’s market capitalisation at USD $29.05M, we can put it in the small-cap stocks category.
ECT’s stock is currently floating at around -60% less than its true value of $4.18, at the market price of US$1.65, based on its expected future cash flows. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Additionally, ECT’s PE ratio is trading at 5.07x compared to its Oil and Gas peer level of, 12.43x implying that relative to its competitors, we can purchase ECT’s shares for cheaper. ECT is also a financially robust company, as short-term assets amply cover upcoming and long-term liabilities. ECT has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Continue research on ECA Marcellus Trust I here. NYSE:ECT PE PEG Gauge Apr 17th 18
BP Prudhoe Bay Royalty Trust (NYSE:BPT)
BP Prudhoe Bay Royalty Trust operates as a grantor trust in the United States. BP Prudhoe Bay Royalty Trust was established in 1989 and with the company’s market cap sitting at USD $475.08M, it falls under the small-cap stocks category.
BPT’s shares are now hovering at around -55% lower than its value of $49.13, at the market price of US$22.20, based on my discounted cash flow model. This mismatch signals an opportunity to buy BPT shares at a discount. Moreover, BPT’s PE ratio stands at around 6.17x relative to its Oil and Gas peer level of, 12.43x indicating that relative to its competitors, we can purchase BPT’s shares for cheaper. BPT is also robust in terms of financial health, as current assets can cover liabilities in the near term and over the long run. BPT also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Continue research on BP Prudhoe Bay Royalty Trust here. NYSE:BPT PE PEG Gauge Apr 17th 18
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.
Daniel Loeb has achieved 16.2% annualized returns over the last 20 years. What is he holding today?
Founder of the event-driven, value-oriented hedge fund Third Point, Daniel Loeb is one of the most successful activist investors on the market today. Explore his portfolio’s top holdings, see how he diversifies his investments, past performance and growth estimates. Click here to view a FREE detailed infographic analysis of Daniel Loeb’s investment portfolio.