The S&P500 Global Oil Index has returned over 16% in a year. The outlook looks positive, as we’ll get further clarity from OPEC+ and its output policy.
So, amidst all this, Saqib Iqbal, a financial analyst at Trading.biz, found one particular stock that is down by 22% YTD and is a potential ten-bagger (Peter Lynch’s term for a stock that returns ten times its initial purchase price).
- Par Pacific Holdings (NYSE: PARR) is down 22% YTD but has the potential for significant growth.
- PARR is undervalued, with an earnings ratio of 3.46x compared to the industry average of 8.86x.
- Forecasted revenue growth and strong financials make PARR a promising long-term investment.
He says, “Compared to the US Oil & Gas Refining & Marketing earnings ratio of 8.86x, PARR offers good value based on its earnings to share price ratio of 3.46x. Because of this, Par Pacific Holdings (NYSE: PARR) is a significant player in a constrained market, where it enjoys higher pricing power and lower competition risks.
The company owns and operates energy and infrastructure businesses. Through direct sales to consumers, it secures a stable outlet for its products and bolsters profit margins by managing an extensive retail network, particularly in Hawaii.
Looking at PARR’s financials, revenues are forecast to grow faster (0.54% per year) than the industry average (-9.33%). Par Pacific Holdings Inc. has accumulated positive free cash flow for the last three years, an unusually high level in the refining sector.
If we look at the price, PARR’s stock is down by 22%. However, Saqib says it is undervalued by more than 40% and can reach $43, an increase of 56% from the current level.
So, if you have a long-term view, PARR can be a great addition to a diversified portfolio.
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