Energy stocks, such as VOC Energy Trust, trading at a market price below their true values are considered to be undervalued. 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.
VOC Energy Trust (NYSE:VOC)
VOC Energy Trust acquires and holds a term net profits interest of the net proceeds from production and sale of the interests in oil and natural gas properties in the states of Kansas and Texas. VOC Energy Trust was established in 2010 and with the market cap of USD $70.21M, it falls under the small-cap group.
VOC’s stock is now trading at -42% below its intrinsic value of $6.89, at a price of US$4.02, according to my discounted cash flow model. This mismatch signals an opportunity to buy VOC shares at a discount. Additionally, VOC’s PE ratio is trading at around 8.12x against its its Oil and Gas peer level of, 12.18x indicating that relative to its comparable set of companies, VOC’s shares can be purchased for a lower price. VOC is also robust in terms of financial health, with short-term assets covering liabilities in the near future as well as in the long run. VOC also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More detail on VOC Energy Trust here.
Navios Maritime Midstream Partners L.P. (NYSE:NAP)
Navios Maritime Midstream Partners L.P. owns, operates, and acquires crude oil tankers, refined petroleum product tankers, chemical tankers, and liquefied petroleum gas tankers. The company was established in 2014 and has a market cap of USD $188.53M, putting it in the small-cap stocks category.
NAP’s shares are now hovering at around -73% below its true value of $19.99, at a price of US$5.46, based on its expected future cash flows. The mismatch signals a potential chance to invest in NAP at a discounted price. Furthermore, NAP’s PE ratio is around 7.96x compared to its Oil and Gas peer level of, 12.18x meaning that relative to its competitors, you can buy NAP’s shares at a cheaper price. NAP is also in great financial shape, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 76.84% has been diminishing for the past few years showing its capacity to pay down its debt. Interested in Navios Maritime Midstream Partners? Find out more here.
Hallador Energy Company (NASDAQ:HNRG)
Hallador Energy Company, through its subsidiaries, engages in the mining, production, and sale of steam coal for the electric power generation industry in the United States. Started in 1949, and currently headed by CEO Brent Bilsland, the company now has 742 employees and has a market cap of USD $197.71M, putting it in the small-cap stocks category.
HNRG’s stock is now floating at around -56% lower than its true value of $16.09, at a price of US$7.00, based on my discounted cash flow model. The divergence signals an opportunity to buy HNRG shares at a low price. Furthermore, HNRG’s PE ratio is trading at 6.48x relative to its Oil and Gas peer level of, 12.18x implying that relative to other stocks in the industry, we can invest in HNRG at a lower price. HNRG also has a healthy balance sheet, as short-term assets amply cover upcoming and long-term liabilities.
More on Hallador Energy 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.