Energy stocks, such as SandRidge Mississippian Trust I and ECA Marcellus Trust I, are trading at a value below what they may actually be worth. Smart investors can make money from this discrepancy by buying these shares, because they believe the current market prices will eventually move towards their true value. If you’re looking for capital gains in your next investment, I suggest you take a look at my list of potentially undervalued stocks.
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 founded in 2010 and with the company’s market cap sitting at USD $25.20M, it falls under the small-cap stocks category.
SDT’s shares are currently trading at -66% less than its intrinsic value of $2.63, at a price of US$0.90, based on my discounted cash flow model. This mismatch signals an opportunity to buy SDT shares at a discount. What’s even more appeal is that SDT’s PE ratio is trading at around 4.13x relative to its Oil and Gas peer level of, 12.43x indicating that relative to its comparable company group, you can buy SDT’s shares at a cheaper price. SDT is also strong in terms of its financial health, with near-term assets able to cover upcoming and long-term liabilities. SDT also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More on SandRidge Mississippian Trust I here.
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 formed in 2010 and with the company’s market capitalisation at USD $29.05M, we can put it in the small-cap category.
ECT’s shares are currently hovering at around -60% under its value of $4.18, at a price of US$1.65, according to my discounted cash flow model. signalling an opportunity to buy the stock at a low price. In addition to this, ECT’s PE ratio is currently around 5.07x compared to its Oil and Gas peer level of, 12.43x suggesting that relative to its peers, ECT’s shares can be purchased for a lower price. ECT is also robust in terms of financial health, as current assets can cover liabilities in the near term and over the long run. ECT has zero debt on its books as well, meaning it has no long term debt obligations to worry about. More on ECA Marcellus Trust I here.
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 founded in 1989 and with the stock’s market cap sitting at USD $475.08M, it comes under the small-cap group.
BPT’s shares are now floating at around -55% below its actual worth of $49.13, at a price tag of US$22.20, based on its expected future cash flows. The discrepancy signals an opportunity to buy low. Also, BPT’s PE ratio is currently around 6.17x against its its Oil and Gas peer level of, 12.43x meaning that relative to its peers, you can buy BPT’s shares at a cheaper price. BPT is also in great financial shape, with near-term assets able to cover upcoming and long-term liabilities. BPT has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Dig deeper into BP Prudhoe Bay Royalty Trust here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.