Q: Who might buy these?
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5i Research Answer:
Both TVE and KEL are trading at attractive levels, and both possess strong balance sheets. We like TVE here given that it is trading only at 1.0x Price/Book, and in the most recent quarter, TVE’s management indicated the company will start to return capital at a more aggressive pace in the future. These names could be attractive for investors who want to get exposure to the energy sector or looking for capital returns in the near term. Both are small in size and could be potential targets for large oil companies to acquire, but we prefer TVE here for long-term holding. Companies such as WCP, VRN or POU might one day take an interest.