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UNLOCKING VALUE IN THE PERMIAN: IDENTIFYING HIGH-UPSIDE COMPANIES

Garrett Baldwin

 

The Piotroski F score is crucial for identifying well-disciplined companies
focusing on shareholder interests. Using a nine-point scale, it awards points
for factors like return on assets, debt reduction, and current ratio
improvement. Investors should target companies with an F score of seven or
higher.

 

Keep an eye on Pioneer Natural Resources (PXD), a potential acquisition target
for Exxon. As major players like Exxon drive a merger and acquisition boom, the
shale industry could consolidate into just a few dominant competitors.

 

Retail investors have a unique opportunity to capitalize on smaller firms with
low enterprise value to EBITDA multiples, robust balance sheets, and minimal
debt. As global economic growth rebounds, oil prices could soar, significantly
increasing the value of these smaller companies.

 

Unlock Hidden Potential: Here’s How Retail Investors Can Thrive in the Energy
Sector

 

Investors should focus on businesses with strong F and Z scores, low debt, and
affordable buyout multiples. Mergers and acquisitions in the oil sector often
lead to consolidation, and climate compliance costs make smaller firms more
appealing acquisition targets for industry giants like Exxon and Chevron.

 

My focus in Flashpoint Trader is on identifying potential takeover targets in
the Permian Basin amid the anticipated M&A boom. This week I featured my top 5
companies in the Permian that are likely to be acquired in the Great American
Land Rush, which has already gained 3.5 to 4%, thanks to media speculation on
M&A within the shale industry. 

 

Companies like Exxon must innovate, acquire land, reduce production costs, and
manage oil reserves. This M&A boom could consolidate dozens of shale players
into eight to ten major contenders in areas like the Permian, Bakken, and Utica.
That’s why we must have an idea of the best-valued companies in the region.

 



Despite fluctuating oil prices, these companies have demonstrated resilience by
maintaining capital discipline. Smaller players exhibit minimal debt,
cost-effective production at $40 to $50 per barrel, prime acreage, and lower
enterprise value to EBITDA multiples. For example, one name we did not feature
in the Great American Land Rush is Callon Petroleum (CPE), a $2 billion market
cap company. It trades at 63 times its book value, showcasing the potential
value in smaller energy sector players.

 



Retail investors possess a unique edge over institutional investors, who often
shy away from smaller companies due to allocation constraints. By zeroing in on
smaller energy firms with robust balance sheet management and profitability at
$45 per barrel or more, retail investors can uncover exceptional value.


Callon exemplifies the potential in smaller players, set to benefit from
industry consolidation and climate compliance costs that burden their less
competitive counterparts. Companies like Callon struggle to compete at scale
against giants like Exxon and Chevron, making them prime targets for investment.


FLASHPOINT TRADER: IDENTIFYING PERMIAN BASIN'S TOP TAKEOVER TARGETS


Some of these companies are trading below their book value and are undervalued,
offering retail investors the chance to capitalize on smaller energy firms with
strong financials and growth potential.


Although these companies may experience fluctuations with oil prices, their
strong F and Z scores, low debt, and low buyout multiples make them excellent
investment choices. By selecting the most affordable companies with no debt,
solid balance sheets, and exceptional management, you can hold onto assets that
outshine cash in terms of value at a time when inflation is eroding the value of
our money. 


Imagine a stock worth the sum of its parts, trading sideways like cash in a
low-interest account. Now, envision that same stock becoming an attractive
buyout target, with its price surging from $10 to $15  within days. Embrace
these incredible opportunities in the Permian, and harness the power of
intelligent options strategies to maximize your probability of profit and
achieve remarkable growth. 

 

 



What You Missed

 

A few weeks back, while filming in Baltimore with Kenny Glick, he shared the
story of Ray, a police officer who, prior to meeting Kenny, had no experience in
trading.

 

When Ray first came across the Private Bull Run, his account had less than $500
in it. However, after spending some time with Kenny and learning the ropes, he
managed to find his own trades.

 

And guess what? In just 8 months, Ray turned that $500 into an impressive
$15,000!

 

Sounds unbelievable, right? Well, you can hear it directly from Ray himself.
Gabe Oropollo, our Director of Customer Service, actually interviewed Ray – so
make sure to check out that conversation! First, it was Andi, and now Ray. These
ordinary individuals are making extraordinary profits trading Kenny's Private
Bull Market.

 

Don't miss out on this opportunity – on Sunday at 1 p.m. (ET), you'll get the
chance to see what the Private Bull Run is all about.

 

In the meantime, Kenny will be sending you one more video featuring a real
retail trader. Trust me, you won't want to miss his incredible story.

 


 

Talk Soon,


Garrett

 





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Welcome to Money Morning LIVE! Join us today and you’ll be hearing from
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