As shale gas and shale oil discoveries in the U.S. are impacting the energy infrastructure sector, Charles Goldblum, President and Founder of Hurley Capital, LLC, has identified a unique investment opportunity in SunCoke Energy, Inc. (SXC).
“What’s interesting about SunCoke Energy is that they’re not really in the oil and gas business. They have a technology where they turn metallurgical coal into metallurgical coke. They do this for steel producers typically on or near their facility where they load this coke directly into their blast furnaces,” Goldblum said. “So that’s a pretty boring business, but they have created an MLP which they will start selling their plants into over time starting next year.”
FOR MORE INFORMATION ABOUT THIS INTERVIEW CLICK HERE.
Goldblum said SunCoke, which trades on its own for six to seven times EBITDA, will likely sell assets to an MLP that they’ve created at nine to 10 times EBITDA.
“SXC will receive a bunch of cash back, which they will redeploy into creating more assets to sell to the MLP while at the same time garnering an increasing portion of the MLP’s cash flow through a preferential sponsor treatment,” Goldblum said. “So we think the stock which is at $20.70 today has probably another 30% to 50% upside from here as they actually do what we think they will do by selling their assets.”
Commodity Stabilization Could Mean Attractive Upside for NGL Energy Partners LP (NGL)
April 06, 2015
New Triumph Group Inc (TGI) CEO Could Mean Opportunity for Investors
June 09, 2015
Government/Academic Research May Mean Greater Upside to Life Sciences Companies
January 27, 2010
Trillium Asset Management Lead Portfolio Manager: ESG Orientation Doesn’t Mean Sacrificing Performance
December 05, 2022
Indications of Pickup in Luxury Sales May Mean Quicker Recovery
December 21, 2009
