Mairs & Power is a small firm whose strength and success has resulted from applying a conservative growth investment approach consistently for over 70 years. Both the Growth and Balanced Funds are built on a foundation of selected quality growth stocks purchased at what management considers to be reasonable valuation levels. When these securities are purchased, the intention is to hold these issues for relatively long periods of time to maximize tax-efficiency and allow the power of compounding to build wealth for its shareholders. However, sales are made on occasion in response to such factors as changing fundamentals, investment strategy shifts, and excessive valuation.
Bill Frels (Trades, Portfolio) is the portfolio manager at Mairs & Power, the investment advisory firm where he started in 1992. Frels retired at the end of 2014, but remained as the chairman of the investment committee and a shareholder.
Its portfolio is composed of 193 stocks and has a total value of $7,207 million. The following are the four stocks trading with lower P/E.
Chevron Corp (CVX)
The stock is currently trading at 11.90 of P/E. This ratio is ranked higher than 94% of the other companies in the Global Oil & Gas Integrated industry that has an average P/E of 26.40. Over the past 12 months, the price dropped -12% and is now trading +10.28% from its 52 weeks low and -19.29% from its 52 weeks low.
The DCF model says the company is fairly valued at current price, while the Peter Lynch earnings line give to the stock the label of undervalued with a margin of safety of 25%.
Profitability & Growth is rated 7/10 and returns are ranked higher than 92% of other companies in the Global Oil & Gas Integrated industry.
Over the last 5 years, revenue grew by 5%, EBITDA by 8.70% and EPS by 11.30%. The situation is getting worst during the last 12 months, with all the above rates declining by 12%, 9% and 10%.
During the first three months of 2015,Ă‚ Bill Frels (Trades, Portfolio) increased his stake on CVX by 57.06% reaching a total of 300,961 shares that he holds at an average price of $106.14/share (a current gain of 10%).
Dodge & Cox is the bigger holder of CVX (he holds 0.67% of Shares Outstanding), followed by Brian Rogers (holding 5,000,000 shares or 0.27% of outstanding shares).
Northern Oil & Gas Inc (NOG)
The stock is currently trading at a P/E of 111.11 +38.83% from its 52 weeks low and -61.85% from its 52 weeks high. Over the past 12 months, the price dropped by 55%.
Profitability & Growth is rated 9/10 but returns are negative (ROE -11%, ROA -4%, ROC -4%) even if they are ranked higher than 95% of other companies in the Global Oil & Gas E&P industry.
The company has double figure’s growth rates over the last 5 years; revenue grew by 88%, EBITDA by 99% and EPS by 96%. Even here during the last 12 months growth rates are getting worst, EBITDA -53%, EPS -248%.
During the first three months of 2015,Ă‚ Bill Frels (Trades, Portfolio) reduced his stake in NOG by 7.77% and now he holds 237,400 shares or 0.39% of outstanding shares. During the same period Mason Hawkins (Trades, Portfolio) bought 2,357,154 shares or 3.83% of shares outstanding and he is now the main Guru holding the company.
Oasis Petroleum Inc (OAS)
The stock is currently trading at P/E ratio of 5.40 and the price that during the last 12 months dropped by 65% is now trading +58.46% from its 52 weeks low and -70.98% from its 52 weeks high.
The DCF model, gives a fair value of $47.06. The stock is undervalued and is now trading with a margin of safety of 64%.
Profitability & Growth is rated 6/10 and returns are ranked higher than 92% of other companies in the Global Oil & Gas E&P industry.
On March 2015, Kyle Bass bought 54,453 shares of OAS, with an impact of 3.59% on his portfolio while other gurus like Pioneer Investments (with an increase of 870%) and Ray Dalio (with an increase of 42%) are betting on this stock.
Phillips 66 (PSX)
The company is the result of the spin off from ConocoPhillips in 2012 and is currently trading at P/E of 10.60 +42.35% from its 52 weeks low and -7.24% from its 52 weeks high and over the past 12 months, the price is flat, it declined by 3%.
Profitability & Growth is rated 5/10 and returns are ranked higher than 93% of other companies in the Global Oil & Gas Refining & Marketing industry. Returns are positive and are at top levels compared to PSX history (ROA +8.38%, ROE +19.34%, ROC +34.99%)
The DCF model says the company is undervalued; it gives a fair value of $109.75 with a margin of safety of 26%.
During the first three months of 2015, RS Investment Management, Richard Snow, Pioneer Investments, Ray Dalio, James Barrow and First Eagle Investment increased their stakes of PSX and now is James Barrow is the main holder with 3.34% of shares Outstanding, followed by Warren Buffett (1.21%) and First Eagle Investment (0.95%)
James Barrow (Trades, Portfolio) is the bigger holder of OAS (he holds 2.99% of Shares Outstanding), followed by Warren Buffett (holding 6,567,600 shares or 1.21% of outstanding shares).
