As Energy Prices Ignite, Shah Directs Investors Toward Unlikely Oil Company

Shah Gilani|March 8, 2022

It’s not hard to figure out what’s hot in the markets right now after yesterday. We experienced a bear and bull market in the West Texas Intermediate (WTI), a key benchmark for the crude oil industry, all in a single day.

How do you play that? Well, I’ve got an answer for you.

Click the video below to watch today’s Take it to the Bank Tuesday.

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Go get some.

03/08/2022 Take it to the Bank Tuesday Transcript:

Hey everybody! Shah Gilani here with your Take It to the Bank Tuesday, where I recommend what you should do with $100 today.

Well, I think it’s pretty easy to figure out what’s hot and what’s not…

What’s hot is energy prices. Oil and gas prices going through the roof. Yesterday (Monday) was crazy. We had a bull and bear market in WTI all in a day. After soaring almost 20% [WTI] reversed and ended up flat in the afternoon. As of close… Well, yet to be determined because I’m recording this on a Monday, so I’m not sure where oil is going to go today. But what I do know is it’s going to go a lot higher.

So, how do you play that?

For your $100, you want to get into the oil services companies. That’s where the money is going to be made. Plenty is going to be made in production and exploration, and maybe refining later on where prices come down a little bit. But the meat of the matter is in the oil services companies that support drillers – because we’re going to “drill baby drill” [now that] we know now we can’t be beholden to world powers for energy.

[The] United States should be self-sufficient in energy. It was during the last administration. That’s changed. It’s going to change back.

So, for your hundred dollars today, I recommend you buy a neat little oil services company. And it’s called Cactus Inc (WHD). [This company] is a wellhead manufacturer that leases out its wellheads to onshore [–] oil and gas drillers. [It also provides] services in terms of wellhead pressure, gauges, and all kinds of equipment that drillers absolutely need, use, pay for because they have to.

This little company (which isn’t really so little) has got a market cap of $3.16 billion. It produces nice revenue of about… I’m going to go around it up to $440 million over the last 12 months. It’s got a nice, tiny little profit margin of 11.31%. Yes. It makes money enough to pay a little dividend.

So, it’s got money to spare. It uses about 40% of the net available to common shareholders to pay a dividend. So it’s got plenty of room to grow its business and, or raise the little dividends, but it’s profitable. That’s what you need to know. It’s sitting on $300+ million in cash and only $33.21 million in debt. And it has a ton of positive free cash flow.

So, I love Cactus.

WHD, Cactus Inc. is Trading right around $58.62. Now, it is one o’clock again on Monday. I’m not sure where it’s going to close. It’s had a nice spike today, as you would expect, given what all prices did on Monday. Well, I think you buy right here.

Yeah, you could wait to see if it comes back down to $55. It really took a huge move up when it broke above $51. I’m not sure you’re going to get a chance to get it back down there.

I’d say, just put your $100 in now, give yourself a 20% stop, and see how high it can go.

Oil and gas plays right in here with the spike that we’ve seen… You want to make sure you have a stop in there. This is a great momentum play. If we have continued momentum in oil and gas prices, if we continue to see WTI (West Texas Intermediate, the US benchmark for crude oil) continue to rise, these kinds of plays are going to soar.

This especially should do well because, even if oil stays elevated but it comes down from where it is and remains around $100 on WTI, or even at $90… That has going to be plenty of reason for the shale drillers to get back to work in the Permian Basin and elsewhere in this country. So, we can get to be energy self-sufficient once again, and Cactus is going to be one of those companies, providing the tools, the wellheads, the pressure gauges, and everything else that it provides to companies who are going to drill baby drill.

So, for your $100, that’d be WHD all day, baby. Go get some.

Cheers.