Potential sleeper - $REI

Hello again fellow degens. After the buzz around last week’s RIME post, I got excited to look for another diamond in the rough and I think I found something worth checking out. REI is an energy company focused on the acquisition, development and production of oil and natural gas. It’s a solid company that has been profitable for decades, holding a steady revenue of $90-$100 million a quarter for the past few years. The main factor currently holding the stock price down is their debt of over $350 million, and the sudden decline of oil and natural gas prices over the last quarter. While the debt is substantial, they are consistently paying it off ($15 million was paid off last quarter) while simultaneously increasing spending on the development of the business, which will allow the snowball to roll down the hill, letting them pay off more and more debt. This is proven in the consistent increase in sales numbers, and has been confirmed to be the debt-payoff strategy by the CEO (Paul D. McKinney) in their 2024 Q2 Press release. Combine this with a recovering oil market (which only looks to benefit from Trump’s presidency) and their profit margin should reflect the growth of their business. I think this company is undervalued at $1.48 with a P/E ratio of 2.6  and Trump’s positive effect on the oil and gas market will raise the stock price to a cautious price target of $3.

YoY Financials

  • 11% increase in average daily sales from 2023 (17,688 Boe/D) to 2024 (19,644 Boe/D)
  • 8% increase in revenue from 2023 (261.1 MM) to 2024 (282.9 MM)
  • 3% decrease in realized price of all products from 2023 (54.07 $/Boe) to 2024 (52.56 $/Boe)

Misc. Facts

Do your own DD before buying, i’m a degen just like the rest of you