Seeking Alpha
All posts from Seeking Alpha
Seeking Alpha in Seeking Alpha - Read, Decide, Invest.,

Star Gas Partners: A Deeply Undervalued Investment Offering 40% To 90% Upside

Star Gas Partners (SGU) is the largest distributor of home heating oil in the United States, serving residential and commercial customers in fourteen states throughout the Northeastern U.S. and Mid‐Atlantic. The Company has a market value of just $375 million, yet in 2014 generated $1.96 billion in revenues and $103 million in EBITDA. SGU's revenues are highly recurring, with 97% of customers on automatic delivery schedules. The market for home heating oil is mature but extremely fragmented; Although, SGU has a market share that is likely under 5% it is still 200x larger than its average competitor. The heating oil industry also features attractive financial characteristics, with recurring cash flows and contractually determined gross profit per gallon. Star Gas's gross profit is largely fixed at $1.00/gallon and the Company constantly hedges its exposure.

Considering Star Gas has net debt of approx. $75 million (net debt is adjusted after making changes… Read More …