Insider Alert

04/04/2017 2:50 am EST

Focus: INDUSTRIALS

Charles Mizrahi

Editor, Park Avenue Investment Club and Inevitable Wealth Portfolio

Noble Corp. (NE) is an offshore drilling contractor based in London, England, and owns one of the most technically advanced fleets in the offshore drilling industry.

Offshore drilling is still struggling.  However, our analysis is telling us the price we paid for NE already factors in a very murky future. We believe any surprises will be to the upside. Mr. Market is offering us FF at a very attractive price.

FutureFuel (FF) is engaged in the chemical and biofuel business. The company’s market cap is around $610 million, or $13.60 per share. Cash and short-term investments make up around $6.70 per share — and the company has no long-term debt.

If you subtract out the cash, the is valuing the business at $6.90 per share. Over the trailing twelve months, FF earned $1.76 per share. To put it simply, Mr. Market is offering us a business at a little less than 4x earnings ($6.90 per share (minus cash)/$1.76 earnings per share). 

And one more thing: management owns a hefty amount of the company and we wouldn’t be surprised to see acquired or taken private by management.

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