It's down almost 5% today and beoming more and more attractive
I bought a small tranche last week. I might buy some more if it drops more. They have huge margins, no competition, lots of industry contracts, they really improve the efficiency of the frackers compared to what they were dealing with before they arrived on the scene, they do have some small barriers to entry with some IP, there are no current competitors, they have sales offices in most of the major areas in play, they have delivered good results to the companies that have hired them.
They really look quite solid, cash flow positive, minimal debt, rapidly expanding - I see dividend increases later this year once they get more of these tanks operating.
You know what worried me a lot...huge insider selling
Company Officers and Directors
CEO $1,455 -$7,458,750
OFFICER $1,004,204 -$38,187,611
DIRECTOR $27,423 -$6,705,756
Total $1,033,08 -$52,352,116
Net Selling -$51,319,034
It always gives one pause.
I don't think it is hugely undervalued, just a fairly valued company paying a good dividend with decent prospects from growth.
I suspect insiders are just using the run-up to lock some profits and have some take home pay.
Interesting article include PSN by Todd Johnson. He's bullish on PSN
I opened up the link.
It looks like Todd sees it the same way as me.
I think this is a good income play with GARP and a chance for some capital gains. The company seems to execute well, has a lot of pleased customers and is expanding rapidly in their servicing areas.
It was interesting to hear the suggestion they may be able to broaden their scope and use their tanks to service other business areas. I don't know if the margins would be as good, though. This would likely dilute the company so it would make sense to dedicate all tanks to oil fields so long as they are running at near full capacity utilization.
I have a bid in at 13.50 for more.
I like Todd's articles....
Today PSN had big swing more than 5% between low/high....
It would be very good for stock if they increase dividends
I suspect we may see one in the second half of the year after they have all their sets running. They really do have the FCF right now to do it but are probably just being prudent about not running up much debt while undergoing their cap-ex plans. Selling those shares a month ago to clear off much of their debt was a shrewd decision that will give them the cushion to be able to maintain a strong dividend policy and pursue their capex plans. At the present, a 8% dividend yield is more than sufficient even without probable upcoming increases. I can easily see this one trading around 20 before the year is through.
PSN took a big hit yesterday and today. Now trading at $13, down 23% off its Feb highs.
Are you buying or anticipating further price reduction? (ie pull out your crystal ball)
I don't know what will happen to the price action.
Many of the energy service companies have had a rough ride lately despite good earnings. I believe much of the concern is due to cutbacks in drilling in the natural gas sector - this has hurt many companies which have little exposure to natural gas drilling. CJES in the US is one such company which I have bought. I think PSN is another such company which has little exposure to nat gas plays. Their revenue should be quite secure as they do water supply for only about 5% of the unconventional drillers and they have very little exposure to nat gas drilling. They have also signed 3-year contracts with many of the companies so their income is secure and they are very profitable right now with very high margins. Earnings and revenues will be rapidly expanding during the year.
I think the market has been fearful because the business is apparently simple and their should be low barriers to entry which should erode into margins at some point in time. Others have taken the opposite POV that this company is excellent in its execution and safety and offers a value-added product that is far superior to anyone else out there in the forseeable future. Their tanks are not only modular, cheap to put up and take down but they are also insulated and provide major advantages in water supply and storage compared to their competitors.
I view this one as mostly an income play but with good potential for capital appreciation as they expand their business.
I am taking the opportunity to buy on the weakness and get paid while the market sees the data come in (they only went public about 6 months ago after being spun off from Open Range) and relaxes. In the mean time you get a 8.3% yield that is likely to increase in the 2nd half of the year.