Q: Is fru a buy for a long term hold at these prices? Your view on the price of natural gas this year and holding arx for this move? cheers
5i Research Answer:
Natural gas prices have been trending higher over the past few years, and we do not see many headwinds that would reverse this in the near term.
We think FRU looks interesting as part of a long-term hold. Margins are strong, cash flows have been expanding, it trades at a cheap valuation of 9X forward earnings, and debt levels are low. We would be OK with FRU as part of a long-term holding here.
ARX has been trending higher, and forward growth estimates are expected to be strong. It has a good dividend yield and buyback policy. We like its financials and it trades at a reasonable valuation of 10.8X forward earnings. We would be comfortable with ARX as a play on natural gas.