Ross HealyEnsign Resource Service GroupESI.TOHOLDNov 18, 2020

It has been a very volatile stock. The price is lower than a few years ago even though the debt situation is better now along with higher natural gas and oil prices. Analysts are targeting a price increase of 125% over the next 12 months.

Sideways looking pattern. Hard to predict future of stock. Doesn't seem to be going anywhere. If fails $2.00 mark, could be more downside. 5/10 rating. 

It is in the energy services business.There has been a big drop in the rig count in the U.S. However the number of uncompleted holes is at a ten year low so new drilling will be needed. Also the price of natural gas is recovering. It is generating $200 million in free cash flow this year and the market cap is $400 million.

Service names have been strong, but this one has lagged. Debt issue. Leading edge rates are falling in US and Canada. Better opportunities in oil names.

He first bought it at 50 cents and it has had a bumpy ride through the years. It is now trading at an attractive yield with a $400 million value and $200 million in free cash flow this year. This gives it a very good 2 X free cash flow multiple. It will likely be using this cash to pay down debt.

It recently reported its best best first quarter since 2014 and is on track for its first positive year since then, even though it acquired a lot more debt. At $2 per share the market is valuing it at 400 million. It expects to have 200 million in free cash flow this year so it would be trading at 2X free cash flow. With this money it could buy back half its shares in one year or pay a very large dividend of perhaps $0.50 per share. However the company is planning to pay back debt which is good since it will increase the equity value.    Buy 5  Hold 4  Sell 0