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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (74297)12/22/2023 12:54:50 PM
From: E_K_S2 Recommendations

Recommended By
JohnyP
Sean Collett

  Read Replies (2) of 78470
 
My no. 1 2024 pick is Ugi Corp(UGI)

My price target is at/near $45/share or a possible +75% gain!.

I started building a position in this name w/ buys in June, July, Aug & Nov. Have an oversize position in this utility,

UGI Corporation is a holding company, which distributes, stores, transports and markets energy products and related services through its subsidiaries. It is a domestic and international retail distributor of propane and butane liquefied petroleum gases (LPG); a provider of natural gas and electric service via regulated local distribution utilities; a generator of electricity; a regional marketer of energy commodities; an owner and manager of midstream assets; and a regional provider of heating, ventilation, air conditioning, refrigeration and electrical contracting services.
The Graham Number valuation model says this company is 32% undervalued w/ a fair value at/near $36.68/share.





That said, management hired investment bankers in 10/2023, JPM & GS to look at their assets and ways to increase shareholder value as well as reduce the EPS volatility due to commodity prices in LNG & Propane. Company sold some Foreign assets in November 2023. CEO stepped down and now we have an interim CEO.

There is some speculation that the company will spin off their AmeriGas division if they can get a fair price. UGI completed the 100% acquisition of AmeriGas in 2021 after buying the rest of the shares they did not own. This asset is worth anywhere from $2B - $4 Billion depending on if debt goes w/ the transaction and/or the acquirer needs the asset.

Some speculation is AmeriGas would just be spun off as a separate company but companies like PSX or even some pipeline companies may be interested in the business. PSX would be the best prospect as they already own similar commodity type companies and are large enough to integrate it into their current operations.

I have Buys as low as $21.50 & as high as $27 w/ my avg cost at $25.

Company has +75% upside even from these levels. Proceeds of any sale will be used to pay down debt.

You earn a 6.25% div while you wait.

Quarterly FCF is positive last 3 quarters but negative in 2022. That was the time they acquired AmeriGas. Prior to that always FCF positive over the previous 10 years!
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