Oil prices rose on Tuesday morning as a result of a drop in the U.S. dollar, making crude more attractive following the over 4% loss incurred on Monday on the prospect of producers returning more than 2 million barrels per day of supply to the market by July.
Brent crude futures increased 1.3% to $62.98 cents a barrel, while West Texas Intermediate crude futures gained 1.4% to $59.45 per barrel.
As a result of these developments, investors may be looking for opportunities in the energy industry. According to the GuruFocus All-in-One Screener, a Premium feature, oil and gas companies that trade below the Peter Lynch value of 15, have GF Valuations that range between modestly undervalued to fairly valued and have a predictability rank of at least one out of five stars include Holly Energy Partners LP (HEP, Financial), Magellan Midstream Partners LP (MMP, Financial), Mesa Royalty Trust (MTR, Financial), Overseas Shipholding Group Inc. (OSG, Financial) and TC Pipelines LP (TCP, Financial).
Holly Energy Partners
Holly Energy Partners (HEP, Financial) has a $2.04 billion market cap; its shares were trading around $19.13 on Tuesday with a price-earnings ratio of 11.97, a price-book ratio of 5.38 and a price-sales ratio of 4.1.
The Dallas-based midstream company provides pipeline, terminal and storage services to transport natural gas and crude oil.
Based on a GF Value of $22.11 and a price-to-GF Value ratio of 0.87, the stock appears to be modestly undervalued.
The GuruFocus valuation rank of 9 out of 10 also points to undervaluation.
GuruFocus rated Holly Energy's financial strength 3 out of 10 as a result of low interest coverage. The Altman Z-Score of 1.33 also warns the company could be at risk of bankruptcy if it does not improve its liquidity position. The return on invested capital, however, surpasses the weighted average cost of capital, indicating good value creation.
The company's profitability fared better, scoring a 7 out of 10 rating on the back of margin and returns that outperform a majority of competitors as well as a moderate Piotroski F-Score of 5, which suggests business conditions are stable. Due to recording a decline in revenue per share over the past five years, the one-star predictability rank is on watch. According to GuruFocus, companies with this rank return, on average, 1.1% annually over a 10-year period.
No gurus are currently invested in the stock.
Magellan Midstream Partners
Magellan (MMP, Financial) has a market cap of $10.01 billion; its shares were trading around $44.89 on Tuesday with a price-earnings ratio of 12.42, a price-book ratio of 4.35 and a price-sales ratio of 4.17.
Headquartered in Tulsa, Oklahoma, the company owns and operates ammonia and petroleum pipelines in the Mid-Continent oil province.
With a GF Value of $54.47and a price-to-GF Value ratio of 0.82, the stock appears to be modestly undervalued.
The GuruFocus valuation rank of 8 out of 10 also leans toward undervaluation.
Magellan's financial strength was rated 3 out of 10 by GuruFocus. As a result of issuing approximately $474.84 million in new long-term debt over the past three years, the company has weak interest coverage. The Altman Z-Score of 1.71 also warns of potential bankruptcy risk as assets are building up at a faster rate than revenue is growing. The ROIC also eclipses the WACC, indicating good value creation.
The company's profitability scored an 8 out of 10 rating. While the operating margin is in decline, Magellan is supported by returns that are outperforming a majority of industry peers as well as a moderate Piotroski F-Score of 5. The three-star predictability rank is on watch as a result of revenue per share declining over the past 12 months. GuruFocus says companies with this rank return an average of 8.2% annually.
With 0.29% of outstanding shares, First Eagle Investment (Trades, Portfolio) is Magellan's largest guru shareholder. David Tepper (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), George Soros (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio) and Bruce Berkowitz (Trades, Portfolio) also own the stock.
Mesa Royalty Trust
Mesa Royalty Trust (MTR, Financial) has a $9.37 million market cap; its shares were trading around $5.20 on Tuesday with a price-earnings ratio of 9.71, a price-book ratio of 3.73 and a price-sales ratio of 9.42.
The Houston-based company owns overriding royalty interests in various oil and natural gas-producing properties in the Hugoton area of Kansas and the San Juan Basin of New Mexico and Colorado.
Trading with a GF Value of $5.14 and a price-to-GF Value ratio of 0.97, the stock appears to be fairly valued currently.
Mesa Royalty's financial strength was rated 8 out of 10 by GuruFocus. Despite having no long-term debt and a comfortable level of interest coverage, the Altman Z-Score of zero warns the company could be at risk of going bankrupt. The ROIC significantly surpasses the WACC, indicating good value creation.
The company's profitability scored a 7 out of 10 rating. Although the operating margin is in decline, the returns outperform a majority of competitors. Mesa Royalty also has a moderate Piotroski F-Score of 4, but the one-star predictability rank is on watch as a result of revenue per share declining over the past five years.
No gurus are currently invested in the stock.
Overseas Shipholding Group
Overseas Shipholding (OSG, Financial) has a market cap of $187.65 million; its shares were trading around $2.15 on Tuesday with a price-earnings ratio of 6.55, a price-book ratio of 0.49 and a price-sales ratio of 0.47.
Headquartered in Tampa, Florida, the company operates a fleet of oil tankers and oil tug-barges.
With a GF Value of $2.26 and a price-to-GF Value ratio of 0.98, the stock appears to be fairly valued currently.
Overseas Shipholding's financial strength was rated 3 out of 10 by GuruFocus on the back of poor interest coverage and a low Altman Z-Score of 0.3. The WACC also eclipses the ROIC, indicating issues with creating value.
The company's profitability did not fare much better, scoring a 4 out of 10 rating. Despite having a declining operating margin, Overseas Shipholding was supported by strong returns that outperform a majority of industry peers and a moderate Piotroski F-Score of 6. Although the company has recorded a decline in revenue per share over the past five years, it still has a one-star predictability rank.
John Paulson (Trades, Portfolio) is Overseas Shipholding's largest guru shareholder with a 7.3% stake. Jim Simons (Trades, Portfolio)' Renaissance Technologies also owns the stock.
TC Pipelines
TC Pipelines (TCP, Financial) has a $2.21 billion market cap; its shares were trading around $30.21 on Tuesday with a price-earnings ratio of 7.75, a price-book ratio of 3.01 and a price-sales ratio of 5.4.
The Houston-based company owns and operates a pipeline network that transports natural gas.
Trading with a GF Value of $30.71 and a price-to-GF Value ratio of 0.98, the stock appears to be fairly valued currently.
GuruFocus rated TC Pipelines' financial strength 3 out of 10. In addition to weak interest coverage, the company has a low Altman Z-Score of 1.02, indicating the potential for bankruptcy. The ROIC only slightly surpasses the WACC, indicating there is value creation.
The company's profitability fared better, scoring a 7 out of 10 rating on the back of strong margins and returns that outperform a majority of competitors. TC Pipelines also has a high Piotroski F-Score of 7 and a one-star predictability rank.
No gurus are currently invested in the stock.
Disclosure: No positions.
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