TPL - Texas Pacific Land (TPL): Insiders are buying the stock
2023-12-12 06:00:00 ET
Texas Pacific Land (NYSE: TPL) stock price is not having a good year as interest rates remains at the highest point in over 22 years. The stock was trading at $1,555 on Tuesday, about 21% below its highest point in September and 42% below its highest point in 2022.
TPL stock price chart
TPL is one of the biggest landowners in Texas
Texas Pacific Land is a leading American company that owns more than 842,000 acres of land in Texas. Most of this land is in the Permian Basin, home to one of the biggest oil and gas reserves in the US.
In addition to owning this land as an asset, the company makes money from the energy sector. It makes money throughout the oil and gas discovery and drilling lifecycle. Some of its sources of money are in saltwater disposal in its land, pipeline, power line, and utility easements, commercial leases and oil and gas loyalties.
Some of its biggest customers are companies like Occidental Petroleum, Chevron, Exxon Mobil, and ConocoPhillips. These are all the biggest energy companies in the United States.
Texas Pacific generated over $667 million in revenues in 2022 up from $451 million in the previous year. It is a high margin company wose profit jumped to over $446 million in 2022. Its net income margin in the last quarter stood at 63% while the EBITDA margin was 79.47%.
Insiders are buying the stock
One of the most popular things to look at when considering an investment is what insiders are doing. In most cases, it makes sense to invest in companies whose insiders are buying and vice versa.
Data compiled by BarChart shows that TPL insiders are buying the stock aggressively. They have initiated 63 buys in the past 3 months and 243 in the past 12 months. In all, they have bought 2,403 shares in the past 12 months.
A closer look shows that Donald Cook, Rhys Best and Murray Stahl have bought shares in the past few months. The most aggressive purchaser is Kinetics Assset Management Horizon, which is a major shareholder of the company. In all, insiders own about 20% of the company.
There are other catalysts for Texas Pacific Land. America’s oil production is still rising amid strong local and international demand. Therefore, while oil price has dropped recently, the long-term outlook is positive. JPMorgan analysts believes that prices will jump to over $150 because of high demand and recent weak investments.
Texas Pacific stock has other benefits. The company has no meaningful debt and has over $650 million in cash. That cash is equivalent to about 4.8% of its total market capitalisation, which helps it to maintain its dividend.
Texas Pacific also owns thousands of acres of land in Texas, one of the fastest-growing American states. Therefore, there is a likelihood that the company’s land assets will continue appreciating in value over years.
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