Unit Corp (UNT)

Low P/E with Movement Potential

Considering Book value, earnings, and market cap...this should beat the market in 5 years.

Beautiful chart at the moment - plus a natural gas play.

Excellent, undervalued company.

Sector pick. Long term. Buy and hold.

US land rig use is in a freefall - which has led to a 65% decline in the oil and gas drilling stocks since mid-2008 - presenting us numerous opportunities in this sector, taking a longer view. Natural gas drilling has held up considerably better than oil drilling.

UNT is a unique story in so far as it is comprised of three segments: drilling, E&P (mostly gas), and a pipeline company (sum-of-parts calcs in process). Management is tough and experienced and have done a very good job of expanding the balance sheet, earning consistently strong ROCs (and EMs relative to the group) funded almost entirely from internal cash flow generation. The company has only 8% long-term debt/capital. UNT has slowed or halted construction of several new rigs to conserve cash over the intermediate-term. The current downturn should provide management with additional acquisition opportunities; they profess to have clear parameters on their acquisition values, which appears to be reflected in the very low goodwill on the balance sheet despite their consistent record of acquisition activity.

Our FV approximates the company's very clean book value - and presumes that the company will earn some economic margin in 2009 despite the very bleak market conditions. At a significant discount to fair value, the risk/reward equation seems compelling.

The natural gas market is fundamentally challenged by ample supply and the ever-present possibility of imports when/if US demand increases. However, the gas market was impacted in a similar fashion as the oil market when demand abruptly decreased. Gas prices should at least stabilize if not trend higher which would certainly inure to UNT’s gas production and transmission revenues, and improve the extreme negative sentiment around the group. UNT is just a good, old-fashioned “book-value-bargain”, to borrow from the late, great John Templeton.

Good Luck!
AlphaPuppy

As the economy shakes out, this stock will be a winner. With more than half of its rigs sitting idle, any pick up in oil prices will increase will increase the use of these rigs.

Unit corp is 3 parts. The energy segment will go up as oil prices rise this summer. The contract drilling segment I work for and will be around even when there is slow downs. Unit is a solid company.

The natural resources and energy sectors have taken a beating in the last few months, but they are key stocks to help us out of this recession.

Well-run company. Their costs are low and their growth is superb.

Come on, does anyone really think we aren't going to be drilling for any more oil? Evidently the market does, which, of course, means this is a buy.

Recession

The market has beaten this company down, making it a good buy. Its fundamentals are good and oil is always in demand.

After looking over the SA pick list, I feel best about this one.

OIL, OIL, OIL........and it is undervalued.

Great company along with a great PE. Target at around $40.

Price to Book so low... For a relatively small cap like this, seth klarman would have screamed buy.

to much punishment great entry point now

Unit will be part of the long-term solution to the US achieving low-emission energy independence and shareholders will be rewarded