Energy stocks, such as SandRidge Mississippian Trust II, trading at a market price below their true values are considered to be undervalued. There’s a few ways you can value a company. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
SandRidge Mississippian Trust II (NYSE:SDR)
SandRidge Mississippian Trust II holds royalty interests in oil and natural gas properties. SandRidge Mississippian Trust II was formed in 2011 and with the company’s market capitalisation at USD $52.71M, we can put it in the small-cap group.
SDR’s shares are currently trading at -64% under its actual value of $2.94, at a price of US$1.07, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Additionally, SDR’s PE ratio is around 4.59x compared to its Oil and Gas peer level of, 12.79x implying that relative to other stocks in the industry, SDR’s stock can be bought at a cheaper price. SDR is also strong in terms of its financial health, as short-term assets amply cover upcoming and long-term liabilities. SDR also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Interested in SandRidge Mississippian Trust II? Find out more here.
Chesapeake Granite Wash Trust (NYSE:CHKR)
Chesapeake Granite Wash Trust owns royalty interests in the oil and natural gas properties located in the Colony Granite Wash play in Washita County in the Anadarko Basin of Western Oklahoma. The company was established in 2011 and has a market cap of USD $67.59M, putting it in the small-cap group.
CHKR’s stock is currently hovering at around -67% beneath its intrinsic level of $4.43, at a price tag of US$1.45, according to my discounted cash flow model. This discrepancy signals a potential opportunity to buy CHKR shares at a low price. In terms of relative valuation, CHKR’s PE ratio stands at around 5.09x relative to its Oil and Gas peer level of, 12.79x meaning that relative to its competitors, we can buy CHKR’s stock at a cheaper price today. CHKR is also robust in terms of financial health, with near-term assets able to cover upcoming and long-term liabilities. CHKR also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Continue research on Chesapeake Granite Wash Trust here.
SandRidge Permian Trust (NYSE:PER)
SandRidge Permian Trust holds royalty interests in specified oil and natural gas properties in the Permian Basin located in Andrews County, Texas. SandRidge Permian Trust was founded in 2011 and with the stock’s market cap sitting at USD $105.00M, it comes under the small-cap category.
PER’s stock is currently trading at -63% beneath its true value of $5.86, at a price of US$2.15, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Furthermore, PER’s PE ratio stands at around 4.64x against its its Oil and Gas peer level of, 12.79x implying that relative to other stocks in the industry, PER’s stock can be bought at a cheaper price. PER is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run. PER also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Continue research on SandRidge Permian 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.