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:

  1. 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.
  2. 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.
  3. 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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