Stock Ideas - Terravest Capital Inc (TVK - TSX)

Stock Ideas

This is not a  stock recommendation, it is an idea. Used chiefly for myself to keep track of information for future reference. An investor must always evaluate the price of the underlying asset before buying. The key question to ask is!...What is the intrinsic value of the business?

Terravest Capital Inc (TVK - TSX)

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Profile

TerraVest Industries Inc is a manufacturer of home heating products, propane, anhydrous ammonia, natural gas liquids transport vehicles, storage vessels, energy processing equipment, and fiberglass storage tanks. The company's operating segments include, : Home Heating and Cooling Products (HVAC Equipment), Compressed Gas Storage and Distribution Equipment (Compressed Gas Equipment), Energy Processing Equipment (Processing Equipment) and Service. Majority of the revenue for the company is generated from its Compressed Gas Equipment segment which manufactures engineered products for the storage, distribution and dispensing of compressed gases including liquid propane gas, natural gas liquids, carbon dioxide and other gases. The company operates in Canada and United States.

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Comments from Stockchase

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Investor Insights

This summary was created by AI, based on 3 opinions in the last 12 months.

TerraVest Capital Inc (TVK-T) is a $1 billion market cap company with no analyst coverage. The company provides storage tanks for the energy fields and is known for its strong acquisition strategies and capital stewardship. The company has demonstrated consistent growth in ROC and EBITDA, with a reasonable valuation and strong balance sheet. Despite the deceleration in growth, experts are comfortable with the outlook and see potential for continued execution going forward.

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He could have made it a top pick. It is about $1 billion in market cap and has no analyst coverage. It provides storage tanks for the energy fields. It is active in acquisitions and they are very good stewards of capital. The ROC is over 20% every year. The P/E is now about 15.

Jordan Zinberg, April 8, 2024

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Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

The strength is a bit surprising considering financial terms were not disclosed on the acquisition. TVK is trading at 10.4x EV/EBITDA, the higher end of multiple averages in the last few years ranging from 6.3x to 10.4x, that said, fundamentally, it is not too expensive given the track record of capital allocation, and we are okay to buy some here (perhaps a quarter position) and average into the position over time. We would add more aggressively to the position if it drops below $60. Momentum is very strong but it is not likely to be a straight up move and some consolidation is to be expected. 

April 3, 2024

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Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

TVK’s growth was driven mainly through its acquisition strategy and it is now trading at 8.3x times' EV/EBITDA. In the 3Q, TVK’s revenue grew 4% to $150.4M, compared to last year of $145M and cash available for distribution also grew slightly by 9% to $13.2M compared to last year of $ 12.2 M. Growth was slower compared to previous quarters of more than 20%, but  the deceleration in growth was expected after two booming years of explosive demand for oil and gas processing equipment and services. Overall, an okay quarter. It has no analysts and thus no estimates, but we are comfortable with the outlook. 

The balance sheet is strong, with net debt of $250M and net debt/EBITDA is around 2.3x. TVK generated healthy cash flow which was mostly reinvested back into the business through acquisitions (TVK pays dividends but the payout ratio was only 17%). We like TVK, the company is trading at a reasonable valuation with a track record of growing EBITDA consistently while opportunistically buying back shares too, we expect TVK continues to demonstrate execution going forward, would be comfortable to average into the position over time.

August 14, 2023

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Source

https://stockchase.com/company/view/1993/TVK-T