Stock Idea…High
Arctic Energy Services Inc
Symbol : HWO
Exchange: TSX
Market Cap : 200.1 Million
Revenue : 218 Million
Three Year Revenue Growth : 10.1 %
Investment Type : Small Cap Growth and Value
Three Year Revenue Growth : 10.1 %
Investment Type : Small Cap Growth and Value
Price/Earnings : 4.7
Price/Book : 0.9
Price/Sales : 0.9
Price/Cash Flow : 7.7
Price : 3.71
Investment Stem : Cheap Small Caps Screen
Investment Stem : Cheap Small Caps Screen
High Arctic Energy Services Inc. is a Canada-based
company, which focuses on providing contract drilling, completion services,
equipment rental and other oilfield services to the oil and gas industry. The
Company operates through providing oilfield services to customers in Canada and Papua New Guinea (PNG) segment. In
PNG, the product line consists of contract drilling services, workover services
and equipment rental including rig mats, cranes and oilfield related equipment.
In Canada,
the product line consists primarily of snubbing services and the supply of
Cryogenic Liquid Nitrogen Pumping Services and equipment rentals. The Company
holds distribution rights for the rental of Dura-Base mats within PNG. It
provides drilling support equipment in PNG, such as camps, forklifts and trucks,
on a daily rental basis and drilling support personnel on a daily rental rate
basis. Its snubbing services are provided using the Stand Alone Snubbing System
units and Rig Assist units.
This one may offer the best value of them all so far, tremendously
cheap and yet still growing. A victim of the optics of the industry the company operates in. Has a cash return of 9.6 while offering a yield of
5.3…Debt to equity ratio of 10.36…Retained earnings became positive for the
first time in 2016, meaning after paying all of their expenses, they still
have money left over to invest in their operations. Management appear to be
astute and opportunistic capital allocators of the companies capital resources (made an acquisition last year where they bought an asset for 15-20 cents on the dollar...read the seeking alpha attachment).
The dreaded metrics
from Morningstar…
http://quote.morningstar.ca/Quicktakes/stock/keyratios.aspx?t=HWO®ion=CAN&culture=en-CA&ops=clear
The company’s
website…
A great article on
the company from seeking alpha, be sure to read this.
Peter Lynch once
wrote a piece in one of his books called Blossoms in the Desert...I'll quote directly from it here...'As a place to invest, I'll take a lousy industry over a great industry anytime. In a lousy industry, one that's growing slowly if at all, the weak drop out and the survivors get a bigger share of the market. A company that can capture an ever-increasing share of a stagnant market is a lot better off than one that has to struggle to protect a dwindling share of an exciting market...The greatest companies in lousy industries share certain characteristics. They are low-cost operators, and penny-pinchers in the executive suite. They avoid going into debt...They find niches, parts of the market that bigger companies have overlooked.'
Investing in the stock of companies when they are unpopular and their charts look lousy isn't easy. Investing is largely a psychological exercise despite the numbers that are involved. An investor has to take advantage of the market's inefficiencies and capitalize on the psychological weaknesses of the other investors who are in the market he's investing in.
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