Massive catalysts in a "left for dead" industry
Value unlock potential reminds me of coal in late 2020
A theme or “sector” idea was not the original intent of this article. My interest started months ago when analyzing one of the smaller, lower market cap names in the industry.
In an effort to better understand the operating environment, I ended up reading a few years worth of earnings calls from the industry leaders.
In particular, I focused on the best-run company with a phenomenal long-term track record. The CEO is an industry legend and has managed to create enormous shareholder value in spite of the difficult operating environment.
The picture that emerged surprised me - it appeared that this left for dead, hated, “dying” industry was on the verge of a significant inflection point - one set in motion by clearly defined, potentially near-term catalysts.
This article will focus on the industry-wide setup or catalysts. I will then briefly highlight the two stocks that I own in the space:
+20% cash flow yield, best management, long track record of compounding shareholder value. If the catalysts play out favorably I see 100% upside over 2-3 year period with potential to continue on as a “compounder” long term.
Highly-levered potential “moon shot” - in better financial condition than is commonly understood - if the catalysts plays out favorably, I see multi-bagger potential over 12-24 months (as well as elevated risks).