Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, petroleum pipeline and storage company SemGroup
With that in mind, let's take a closer look at SemGroup's business and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||Tulsa, Okla. (2000)|
|Market Cap||$1.1 billion|
|Industry||Oil and gas pipelines|
|Trailing-12-Month Revenue||$1.56 billion|
|Management||CEO Norm Szydlowski (since 2009)
CFO Robert Fitzgerald (since 2009)
|Operating Margin (Average, Past 3 Years)||2.9%|
|Cash/Debt||$155.8 million / $343.9 million|
Enterprise Products Partners
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 98% of the 49 members who have rated SemGroup believe the stock will outperform the S&P 500 going forward. These bulls include kenjotto and All-Star XMFConnor, who is ranked in the top 10% of our community.
Just last week, kenjotto highlighted SemGroup as a particularly special situation:
… the new management seems to be on the right path. The refinancing and capital investments by themselves would be good things for this stock. But, throw in that this company will most likely convert to an MLP soon and the awesome dividend that will ensue, and this stock will have an awesome return coming soon.
Currently, SemGroup even trades at a cheapish price-to-book ratio of 1.3. That represents a clear discount to industry peers like Enterprise Products (3.1), ONEOK (3.1), and Kinder Morgan Energy Partners
CAPS All-Star XMFConnor elaborates on the opportunity:
• Semgroup's bankruptcy was caused by poor management -- not the underlying business.
o The CEO essentially speculated on the price of oil -- shorting it against its huge run in 2008 which ended up bankrupting the company.
• The entire senior management team has been replaced and the business now operates as it always should have -- as a primarily fee-based midstream energy transportation company.
o Catalyst: SEMG is likely to convert to an MLP, like the rest of the major midstream energy companies. Once this occurs and SEMG gains analyst coverage over time, SEMG should trade at similar multiples to its comp group
• There could be significant additional upside given a successful credit refinancing and the use of additional leverage, in line with industry averages.
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