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Strategies & Market Trends : Dino's Bar & Grill

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To: Goose94 who wrote (37197)	1/5/2018 8:04:20 PM
From: Goose94	Read Replies (2) of 202736

Source Energy Services (SHLE-T) top pick from Eric Nuttall on BNN.ca Market Call Friday Jan 5th @ 1300ET SHLE controls about 60 per cent of the Canadian frac sand market and offers exceptional leverage to the trend of increased proppant loading in Canada (ie. using more sand on a per well basis to achieve higher productivity levels). Recent estimates from First Energy have the Canadian market for proppant reaching 7.8MM tonnes in 2018 (up from 6.1MM tonnes in 2017) and 10.2MM tonnes in 2019. We believe pricing will continue to increase in 2018 and escalate further in 2019. SHLE trades at 4.0X our 2018 estimate and ~3.4X our 2019 estimate (eight per cent 2018 FCF yield). Given their ability to further consolidate the Canadian market, we believe the market is greatly underappreciating their forward earnings power. If SHLE could get a closer multiple to their U.S. peers (SHLE has superior fundamentals to them), the stock today would be close to $13.00 = 45 per cent upside.

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