Today I thought I’d finally get around to sniffing out the answers to the Australian Edge teaser from David Dittman about liquefied natural gas (LNG) — we’ve had a lot of questions, and I also personally have a small investment in an LNG stock (that’s Golar LNG, GLNG, which we’ve covered many times in the past), so we’ll look into that in a moment.
But first, we had earnings releases this week on a couple past “idea of the month” stocks that I should at least mention — and one of them led to a small personal buy today for me.
TGS Nopec (TGS in Oslo, TGSGY on the pink sheets) I already mentioned for you, but that was yesterday in a side note and you might have missed it — I suggested it as one of our “Idea of the Month” candidates for it’s large and valuable seismic library and great cash flow (and a beaten down price after they cut guidance a couple times this year), and they released earnings on Wednesday. Short answer: steady as she goes, the quarter was no worse than we had been led to expect, they have some visibility into several large projects to increase the library (and revenues) next year, and I think it’s still worth buying under $27 (under 160 Kroner if you’re able to buy in Oslo, where it’s much more liquid). It’s not likely to become a growth darling immediately again, but should have excellent cash flow and not be in critical condition if oil prices collapse (thanks to their asset-light model, and lack of debt). I still own it, I’m not buying more but I like the stock as a long term cash flow compounder — if the model is really changing and the prefunding paid by explorers starts to drop on a more consistent basis (as opposed to just a bad year), I’ll have to reconsider, but I’ll give this some leeway while I wait unless we get a substantial drop in the price that forces me to re-evaluate.
And Xerox (XRX) released earnings yesterday (you can see the conference call transcript here) that you would have thought were the end of the world — the stock crashed by 10%. Now, that’s probably really just because everyone had started to fall in love with the turnaround plan (“become the next IBM in services”) ...