Last week, I presented a stock idea at the Future Generation Investment Forum. Despite being the biggest beneficiary of the oil and gas industry investing to maintain its wells, this company trades on just a PE of 12x. Here, I outline why WorleyParsons could be set to soar as the oil and gas cycle turns. Specifically, there are three key reasons why I like WorleyParsons:
- The position of where we are in the cycle. Over the past few years, their revenue has fallen over 50%. However, the oil and gas cycle is turning. In the past 5 months, they have won more business at any given time since 2013.
- Self-help that’s gone on over the last few years. In 2015, they received a gift. That gift was a CFO named Tom Honan. Tom was the former CFO of Computershare and Transurban. With the cost-out program and the balance sheet repair, we believe WorleyParsons is well-placed to grow earnings as the oil and gas cycle turns.
- Valuation. The stock is deeply undervalued at the moment trading on just 12x PE.
There are two main reasons why the stock is undervalued at the moment and this could provide a great window to buy. Watch the full presentation below.
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