Energy
TPL captured more water business in Q2 than ever before leading to revenue and earnings exceeding Hamed Khorsand’s expectations. The stock has been mostly trading with the price of crude oil, but non-oil and gas revenue is nearly 50% of total revenue, creating a business model that has effectively hedged the volatility related to energy prices. Hamed believes this change in revenue mix should lead to a higher valuation. He forecasts FY23 revenue of $619.9m and net income of $383.6m, or $49.83 per share. The increase in the cash balance should lead to more shares being repurchased. TP $2750 (45% upside).
Edition: 167
- 18 August, 2023