Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (CAD) | Target 1 (CAD) | Target 2 (CAD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 10 Sep, 24 | PHX | Speculative Buy | CAD 9.08 | CAD 10.17 | CAD 10.88 | 13 days | 19.8% |
Data Powered by EOD Historical Data (“EODHD”).
PHX Energy Services Corp. provides horizontal and directional drilling services, rents performance drilling motors, and sells motor equipment and parts to oil and natural gas exploration and development companies in Canada, the United States, Albania, the Middle East regions, and internationally. It offers Atlas motors; Velocity Real-Time Systems that provide downhole guidance systems; Echo system; PowerDrive Orbit RSS, a rotary steerable system; performance drilling motors; P-360 Positive Pulse MWD System, a measurement while drilling (MWD) tool; and E-360 EM MWD System, a MWD tool that transmits electric signals through geological formations. The company also provides 360 CV MWD System, a clear vision tool, which surveys inclination and gamma in real-time closer to the bit; 360 RWD System, a resistivity while drilling sub; and North Seeking Gyro that offers real-time QA/QC checks downhole. In addition, it offers directional drilling and motor rentals, survey management, and Gyro surveying services. The company was formerly known as Phoenix Technology Income Fund and changed its name to PHX Energy Services Corp. PHX Energy Services Corp. was founded in 1995 and is headquartered in Calgary, Canada.
Higher Cash Flows from Operations: CAD 39.3 mn in Q2 2024 vs CAD 22.6 mn in Q2 2023
Lower Loans and borrowings: CAD 9.6 mn in Q2 2024 vs CAD 27.6 mn in Q2 2023
Lower Adjusted EBITDA: CAD 30.0 mn in Q2 2024 vs CAD 34.8 mn in Q2 2023
Lower Net Income: CAD 12.9 mn in Q2 2024 vs CAD 18.1 mn in Q2 2023
Volatility in the commodity price , Regulatory risks, Inflationary pressures, Derivative headwinds, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 9.08 | 7.5 | 10.17 | 10.88 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Rising rig counts: In Canada, the rig count remains above the 5-year average, and the group foresee the Canadian division continuing to generate strong results in this positive environment. Its ability to outpace the industry’s growth is driven by the strong market share in the deeper basins and premium technology offering, which has recently been strengthened with the deployment of RSS.
An income play: The dividend pay-out practice translates into an essential factor for regular income-seeking investors with a long-term horizon. Recently the company has paid a quarterly cash dividend of CAD 0.2 per common share. Moreover, at the last closing price of CAD 9.22 as on September 9, 2024, the stock offered a healthy dividend yield of 8.69%, which looks awesome considering the current macros and interest rates.
Anticipates growth in the MENA region: The company anticipates growth in the MENA region over the next few years, however with its strategic partnership and agreement currently in place, this revenue growth is not likely to require material capital expenditures to fulfill its obligations, whcih is a key positive.
Considering the expected valuation upside, stable revenues, healthy guidance, anticipating growth in MENA region, decent dividend yield, current trading levels and key business risks a ‘Speculative Buy’ recommendation has been given on the stock at the last closing price of CAD 9.08, as on September 10, 2024.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Energy Industry: Oil & Gas Drilling
| Company | Change (CAD) | Price (CAD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| PHX PHX Energy Services Corporation |
0.05 0.56% | 9.02 | 6.32 | 7.91 | 0.69 | 2.11 | 0.75 | 3.81 |
| PD Precision Drilling Corporation |
1.10 1.37% | 81.50 | 5.42 | 9.78 | 0.65 | 0.76 | 1.08 | 3.55 |
| ESI Ensign Energy Services Inc |
- -% | 2.71 | 17.76 | 17.27 | 0.33 | 0.42 | 0.97 | 3.46 |
| WRG Western Energy Services Corp. |
-0.08 3.04% | 2.55 | - | 10.81 | 0.41 | 0.31 | 0.87 | 4.43 |
| ACX ACT Energy Technologies Ltd. |
-0.05 0.79% | 6.25 | - | 5.90 | 0.37 | 1.09 | 0.53 | 3.36 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a medium to long-term duration. Recommendations provided in this report are based on financial as well as technical parameters in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
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