8 to 10 Bagger Potential in 2/3 Years?
Yesterday's year end results and conference call exceeded expectations. The Pioneer Pipeline sale is a game changer for TWM in the current environment and will give them the debt reduction would normally have been done with an equity raise to finance the Refinery acquisition if the share price had been decent at that time. Should get rid of the expensive escalating rate 2nd lien financing.
Around $130m debt reduction from Pioneer + maybe another $70m from cash flow this year could reduce debt by around $200m.
The EBITDA estimate of $200m+ could be an annualized $225m+ in Q4 ( the refinery could well be closer to $100m than the $75m budgeted). They have potential new capital projects and will likely find another sizable growth opportunity over then next year, so the runway is there to see the potential for $300m EBITDA by end 2021. With a very modest EBITDA multiple at half the level that normally applies to the large pipeline and utility companies TWM has the potential to see its share price in the $4+ range in 2 to 3 years.
We are clearly already in a global recession, although it will not be official until there are 2 quarters of negative growth, which means it wont be declared a recesion until the second half of this year. Assuming the coronavirus is brought under control globally over the next 3 months, economic growth and the equity markets could be picking up again in the second half of the year.
Quite possible that TWM will see its share price below 40 cents again this year if we get more market meltdown days. If so, that could be the time to buy more, The share price was decimated in the past 2 weeeks due to debt concerns which will still probably linger until the Pioneer sale is completed.
This is the only company I can identify at present with this type of share price appreciation potential over 2 to 3 years. If anybody has ideas on other companies with this level of potential outside O&G exploration/production and high tech please share.