Freehold Royalties Ltd T.FRU

Assessment

[retiredcf]

I would like your opinion on Freehold Royalties. The stock is up from its lows but nowhere near the 2014 highs even though the price of oil has skyrocketed.

FRU has shown solid growth over the past couple of years and it has a strong balance sheet with a high ability to service its debts. It is profitable, is expected to grow nicely into next year, and pays a solid dividend yield of 5.0%. Its free cash flows are somewhat lumpy year-over-year, and it has issued shares over the past year. It is trading at a good valuation of 5.5X forward sales and 18.7X forward P/E, but relative to some other energy names (KEL, TVE, SGY), its valuation is still on the high end.  (5iResearch last Thursday)

[Rainyday]

The decade of 2011 to 2021 was not kind to the oil and gas sector - SGY for example in 2014 traded at about 6 times its price today (and it's been lower). Oil companies are bringing in huge revenues these days and - unlike in previous times when oil prices went up - they're not blowing the increased revenues on high premium acquisitions and large increases to CAPEX. They are raising

[Konaboy]

While obviously it is highly dependent on ther prevailing commodity price, so is held back like all of the producers, I think what's tying it down is that they have an explicit growth strategy.  And this adds an addition level of risk - overextension, buying in at (relatively) high valuation, dilution, etc. If they did not grow, they would probably have all debt paid off in Q3, and