Q: For a one or two percent short term speculative play---what can you say about Total Energy---- TOT---- to use the possible energy wave for a little ride?
5i Research Answer:
The balance sheet is OK (debt 1X cash flow), good growth is expected, it offers a 3.13% dividend (the dividend did stop from Dec. 2019 to June 2022), and is very cheap at 6X earnings. The energy service sector is of course cyclical, but its customers are in good financial shape and looks set to have a couple of good years of earnings. We note it has lost money in four of the past eight years, and its small size adds some risks. Insiders own 8%. We think it looks OK, being cognizant of the small cap and sector risks here.