Under-the-radar stocks having great year

IN a punk year, four stocks with a current market value of $1 billion or more have tripled or better. None of them is a household name, and it’s a good bet that you haven’t heard of some of them.

PBF Energy

The biggest gainer is PBF Energy Inc. (PBF), up 254 percent through Nov. 4. The company, based in Parsippany, New Jersey, refines petroleum into gasoline, heating oil and other products.

A friend of mine in the oil business once told me that refining is a bad business. Out of every 10 years, he said, refiners will have one great year, one good year and eight mediocre or bad years.

When I look at PBF’S earnings history from 2011 through 2021, I think my friend’s description fits pretty well. PBF had a great year in 2011 and a very good year in 2017. The rest were nothing to write home about.

But PBF is having a heck of a year now. It has earned $19.23 per share over the past four quarters, which is a whale of a profit for a stock trading at about $46 a share. Analysts expect earnings to tail off next year. But I think the stock is fine as a six-month to one-year play.

Target Hospitality

The next best gainer is Target Hospitality Corp. (TH), up 226 percent.

If you’re an oil company that needs housing quickly for your work crews, you might turn to Target. It has also provided housing for the Olympics, for refugees from Hurricane Katrina in 2005, and for military installations.

I dislike several things about this stock. Debt is 285 percent of stockholders’ equity. I feel uncomfortable with levels above 100 percent. The stock trades for nine times book value. I prefer a ratio of two or less and worry about price-to-book ratios above five.

Tidewater

Probably the best known stock in this group is Tidewater Inc. (TDW), up 212 percent. Tidewater provides boats to ferry personnel and supplies to and from offshore oil platforms.

I expect the price to be above $80 a barrel for most of the next three years. Therefore, this stock, selling at 1.7 times book value, makes sense to me.

Tidewater has lost money seven years in a row. Losses are narrowing, but analysts don’t expect the red ink to change to black until 2024. But I think the company has staying power.

International Seaways

The fourth outsized gainer, up 208 percent, is International Seaways Inc. (INSW). The company, based in New York City, owns and operates a fleet of 78 oil tankers, including 13 VLCCS (very large crude carriers).

Seaways was profitable pro forma in 2015 but hasn’t had a profitable year since the 2016 spinoff from Overseas Shipholding Group Inc. (OSG).

Analysts expect it to turn profitable this year (estimated earnings $6.97 a share) and to do slightly better in 2023. The stock sells for only six times estimated earnings, which is tempting.

The record

A year ago, when I discussed the biggest winners for the first 10 months of 2021, I said, “I pretty much hate them all.” Many of them were meme stocks, pushed up by Internet hype.

I was right. The five stocks I discussed fell an average of 58 percent, while the S&P 500 was down about 15 percent. Most notably, Theralink Technologies Inc. dropped more than 99 percent, Ocugen Inc. fell about 88 percent, and AMC Entertainment Holdings Inc. declined 83 percent.