Energy companies, such as Seadrill Partners, trading at a market price below their true values are considered to be undervalued. 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.
Seadrill Partners LLC (NYSE:SDLP)
Seadrill Partners LLC owns, operates, and acquires offshore drilling units in the United States, Angola, Thailand, Canada, Equatorial Guinea, Nigeria, Indonesia, Ghana, and internationally. Formed in 2012, and currently headed by CEO Mark Morris, the company provides employment to 1,199 people and with the company’s market cap sitting at USD $305.77M, it falls under the small-cap category.
SDLP’s stock is now trading at -88% under its value of $27.86, at a price tag of US$3.28, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. In terms of relative valuation, SDLP’s PE ratio is currently around 2.13x relative to its Energy Services peer level of, 25.92x suggesting that relative to its comparable set of companies, SDLP can be bought at a cheaper price right now. SDLP is also in great financial shape, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 125.72%, which has been dropping for the past few years revealing SDLP’s ability to reduce its debt obligations year on year. More on Seadrill Partners here.
Capital Product Partners L.P. (NASDAQ:CPLP)
Capital Product Partners L.P., a shipping company, provides marine transportation services in Greece. Capital Product Partners was started in 2007 and with the company’s market cap sitting at USD $399.43M, it falls under the small-cap stocks category.
CPLP’s shares are currently floating at around -75% under its real value of $12.33, at the market price of US$3.09, based on its expected future cash flows. This price and value mismatch indicates a potential opportunity to buy the stock at a low price.
CPLP is also a financially healthy company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 50.80% has been declining for the last couple of years signifying its capability to pay down its debt. Continue research on Capital Product Partners here.
Green Plains Partners LP (NASDAQ:GPP)
Green Plains Partners LP provides fuel storage and transportation services. The company was established in 2015 and with the company’s market capitalisation at USD $540.80M, we can put it in the small-cap group.
GPP’s shares are currently hovering at around -47% beneath its actual worth of $32.02, at a price of US$16.85, based on its expected future cash flows. The divergence signals an opportunity to buy GPP shares at a low price. Also, GPP’s PE ratio stands at around 9.29x compared to its Oil and Gas peer level of, 13.51x meaning that relative to its peers, we can invest in GPP at a lower price. GPP is also strong in terms of its financial health, with near-term assets able to cover upcoming and long-term liabilities. Interested in Green Plains Partners? Find out more 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.