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Strategies & Market Trends : Ted Warren's Investolator

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From: stackedinvest	5/4/2022 2:31:08 AM
	of 1798

PHX Minerals (PHX) is a natural gas and oil exploration & production company that operates in several of the major shale energy areas throughout the United States. I have no position yet, but have been keeping an eye on it. A bit about the business.... The company is similar to a royalty trust in that it purchases oil and gas-rich properties and then leases them out to companies that lease that land, drills for the resources, and actually operates the well. PHX Minerals receives land lease fees and a royalty that consists of a portion of the production. This model has the advantage of having lower costs than the actual resource producer. Onto the 10-year chart: PHX started to drop around 2018 and really fell in early 2020 (COVID). It has been forming a base since then. Zooming in on the chart, there appears to be a head and shoulders bottom with a low in October 2021 and another smaller head and shoulders bottom with a low in December 2021. The stock has been on a rise since breaking out of the second head and shoulders bottom around March 2022. Financials PHX’s market cap is $124M. 2021 revenue was $21M. The company owns 245,864 net mineral acres. However, 70% of that land is currently unleased. This has the potential to generate additional revenue without the company having to spend additional capital. There is also the potential to generate additional revenue from current leases if the commodity prices continue to increase. The company’s current dividend yield is $1.71%. Share Structure & Insider Transactions There are 34.5M shares with a float of 20.21M. 16.27% is owned by insiders. Insiders have been buying shares recently between 2.14-3.70. Conclusion I like the look of this chart. I imagine the big drop in 2020 combined with a somewhat stalled recovery over the past two-years has depressed many shareholders. I also like that it has a low float with recent insider purchases. One concern I have is that the stock has been on a bit of a rise already, however this could also reduce some risk. As always, interested to hear any feedback or thoughts. - Stack

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