The Alternative Activist recently published an article to Seeking Alpha that won 3rd place in the Seeking Alpha Contrarian Contest. The beginning and link to the remainder of the article is below:
Oil Crash Drags Down The Misunderstood Natural Gas Services Group (NGS) To Attractive Valuation
- Long-term investors can capitalize on the oil and natural gas down cycle, and instead of guessing where prices will trade, purchase a high quality company at a discounted valuation.
- NGS has never posted a quarterly loss and can withstand any prolonged down cycle with no debt and EBITDA and net income margins of 49% and 15%.
- NGS is the price leader in its industry, often charging 5-15% more per rented compressor than its competitors; its homogeneous fleet enables superior service support and compressor run times.
- Compression is very often required and sticky. Without compression, oil and natural gas will not move through the pipeline infrastructure, making compression a requirement during a well’s life.
- Investment downside is well protected given that NGS trades just above its tangible book value and any reversion to historical, peer or precedent valuations will result in material gains.
Establish a long position in Natural Gas Services Group Inc. (NYSE:NGS). Current oil prices have been cut in half since September 2014 and natural gas prices haven’t fared much better, down by more than a third. The volatile commodities cause cyclicality across energy sector stocks and the current down cycle has sent major energy ETFs such as Vanguard’s and SPDR’s…
Read the rest here.