By: GZ on Domenica 03 Marzo 2013 19:16
Barron's segnala un titolo americano small cap nel settore delle foreste, terreni da edificare e concessioni di terreni da affittare per royalties per il gas e il greggio e anche un poco di diritti sull'acqua
Il titolo è ^Forestar che quota 17.5$#http://stockcharts.com/h-sc/ui^ adesso ma secondo i report citati da Barron's ha asset che possono valere 30 dollari per azioni cioè 1.3 miliardi meno 290 milioni di debito uguale un miliardo e rotti di dollari come NAV quindi mentre oggi capitalizza sui 660 milioni. Secondo me un sacco di gente legge l'articolo oggi e da lunedì compra il titolo perchè suona molto convincente
Forestar Group boasts a rich portfolio of assets and businesses, including 136,000 acres of real estate, mostly in Texas; 752,000 acres of oil and gas properties; 1.5 million acres of water rights; and 275,000 acres of timberland. Yet the company trades for just a fraction of its net asset value, as investors don't quite know what to make of this diverse mix.
Peter Martin, an analyst at JMP Securities, believes the shares are trading at a 40% discount to net asset value, which he puts at $18 to $43 a share. Forestar's shares (ticker: FOR) closed on Friday at $17.56, or 1.2 times book value. The midpoint of Martin's range is $30 a share.
Forestar has been a collector of royalty payments from oil and gas drillers, but now has become a driller itself.
The discount to net asset value isn't likely to persist. With the housing market improving, Forestar is accelerating its sales of residential lots and investing the proceeds in higher-returning ventures, including its oil and gas business and real-estate development properties.
The strategy calls for tripling sales of residential lots, oil and gas production, and earnings before interest, taxes, depreciation, and amortization. From 2008 to 2011, Forestar generated average Ebitda of $34 million a year. Through 2015, management is targeting average annual Ebitda of $120 million. Last year, Ebitda reached $90 million.
As Forestar's strategy unfolds, net asset value and book value could rise, driving the stock higher, perhaps by as much as 70%. Martin thinks the shares are worth $29, or 1.6 times his estimated 2013 book value.
Incorporated in 1955 as the Lumberman's Land Corp., Forestar develops residential and commercial lots and sells them to builders. In addition, it owns interests in a hotel and three residential communities. Seventy percent of the company's real-estate investment is located in Texas, in attractive markets such as Austin, Dallas, and Houston. A legacy timber business in Georgia produces fiber that Forestar sells primarily to Temple-Inland, its previous owner. Forestar was spun off from Temple Inland, now part of International Paper (IP), in 2007.
On the oil and gas side, Forestar leases land to operators in exchange for royalties. It also drills wells. Most of its acreage is located in Texas, Georgia, and Louisiana. Oil accounts for 57% of its energy reserves.
In 2012, real estate contributed 69% of total revenue and 67% of segment earnings. The oil and gas business accounts for 26% of revenue and 27% of earnings. The remainder comes from the timber business. Forestar earned $12.9 million, or 56 cents a share, for the year on revenue of $173 million. This year, analysts expect earnings to increase to 64 cents a share, as both real-estate sales and oil production rise.
Real Estate$910 million
Oil & Gas$286 million
Miscellaneous Assets$30 million
Total Value of Assets$1.3 billion
Less Net Debt-$284 million
Net Asset Value$1.05 billion
Net Asset Value/Share$30.00
Sources: JMP Securities; Thomson Reuters; company reports .
With its well-positioned acreage, Forestar is benefiting from a rebound in builder demand for finished residential lots. Last year, it sold 1,365 developed lots, a 22% increase from 2011. Average profit margins on lots have risen 11%, which helped boost real-estate earnings to $54 million for the year, from a loss of $26 million in 2011. Management expects to sell 1,900 lots this year, a 39% increase.
Multifamily projects also are a path for growth. Forestar has been building up its portfolio of development projects, which typically yield high returns on capital. The firm owns a 289-unit development in Austin, Texas, called Promesa, which it completed last year and already has leased 80%. Two more projects are in development, and three are in the planning stages.
FORESTAR'S LARGEST OPPORTUNITY may be in oil and gas. Until this year, the company leased land to operators, who produced natural gas. It typically received a royalty interest based on production levels. In September, Forestar bought its own oil company, Credo Petroleum, an exploration and production concern with valuable oil-producing properties in the Bakken and Three Forks formations.
With Credo, Forestar focuses on oil production, which jumped in the December quarter by 245%, to 172,000 barrels. Management plans to spend $73 million this year on drilling and well completion, continuing the momentum. Martin estimates that 774,000 and 996,000 barrels of oil will be delivered in 2013 and 2014, respectively, up from 371,000 barrels in 2012. He sees division earnings rising this year 124%, to $48 million. By 2014, the division could account for 80% of earnings. Management couldn't be reached by press time.
Forestar has a solid balance sheet, with $10 million in cash to $294 million in debt as of Dec. 30, or net debt at 35% of total capitalization. The company is expected to generate $31 million in free cash flow this year.
Longer-term, Martin believes Forestar could spin off the E&P business once oil production is ramped up. Doing so most likely would close the valuation gap between the stock and net asset value. Until then, several catalysts could lift the shares, including the monetization of water rights. In time, Wall Street will understand that Forestar is a gem.