More than 8 months ago I shared a post where I wanted via polling to discuss the advantages of holding the Texas Pacific Land ($TPL (-0,4 %)) shares, knowing that these would drop from $1800 to $917. 📉
My dilemma was never to lose the money, but to sell them knowing that I would buy them again the following year. 📈
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In general, I have to add that $TPL (-0,4 %) have no comparable stock-listed comparison. There simply isn't any other company with surface, water, and mineral rights.
Moreover, the market expects elevated double-digit annual EPS growth. If we get a rebound in oil and gas prices, I expect these numbers to end up being much higher, potentially allowing $TPL (-0,4 %) to return 15-20% per year.
Reasons to Buy $TPL (-0,4 %)
and $LB
stocks:
(On mobile phone maybe not, but you can read the article in its entirety through a computer)
As Leo Nelissen explained in the article, that's due to three unstoppable tailwinds:
- Data centers are desperate for power, and the Permian's dirt-cheap natural gas makes it the perfect solution.
- Water is a booming business, as toxic produced water is becoming a costly bottleneck, and LB/TPL profit from every barrel.
- Energy stocks are substantially undervalued, and these two are cash machines with 90% EBITDA margins.
Risks:
- Long-term risks are a steeper-than-expected decline in Permian oil activity, a more rapid buildout of nuclear power, resolving water issues among hyperscalers, and a general decline in oil and gas prices.
PS: Texas Pacific is a energy company. Technically speaking. However, does not produce a single drop of oil. Texas Pacific generates revenues from oil, gas and water royalties.
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In the future, even if all the recent stock price drop is not just noise and the expected profit is not achieved, I will not be disappointed, because in every mistake there is a valuable lesson. 💎
Thanks for reading! ✌️
