CSM.TO - The Most Undervalued Company in the World?

First of all, this is not financial advice. I am a brand new investor trying to learn as much as I can everyday. I am nowhere near qualified to give any financial advice whatsoever, so take the following information as just the personal opinion of some idiot on the internet. I recently ran into this company that seemed incredibly peculiar; from a financial perspective as well as from a trading perspective. You see, Clearstream Energy (TSX:$CSM.TO) (PNK:$NWPIF) is this Canadian company that services oil/energy infrastructure and has an Enterprise Value of approximately 321.32 million CAD, according to Yahoo Finance at the time of writing. Yet, the company trades on the TSX at a market cap of a mere 9.9 million?? ($0.09 CAD per share at the time of writing; a pathetic 3% of the estimated Enterprise Value). A deeper dive into the company’s financials on Yahoo Finance shows that it has a Trailing Twelve Month (TTM) revenue of 393.121 million dollars, with a gross profit (TTM) of 16.925 million. Their Official Annual Report for the fiscal year ending December 31, 2020 records an even more impressive 33.686 million in gross profits during a year plagued by the height of the COVID-19 pandemic. In addition to that, their company website boasts over 4000 employees, though this value appears lower on other platforms like LinkedIn (~2000 employees listed). Official Annual 2020 report : https://www.clearstreamenergy.ca/uploads/ClearStream_2020_Annual_Report.pdf Yahoo Finance Statistics: https://finance.yahoo.com/quote/CSM.TO/key-statistics?p=CSM.TO Fourth Quarter and 2020 Annual Financial Results Summary: https://finance.yahoo.com/news/clearstream-announces-fourth-quarter-2020-220000282.html Company Website: https://www.clearstreamenergy.ca/about/who-we-are.html Ok, sounds pretty interesting. Is there anything concerning about this company? Yes, actually. A quick look at the company's balance sheet shows that they have almost 200M in debt (BIG YIKES!). The assets/liabilities ratio for the company doesn't look too great either. However, if we pull up the February 24th press release, we see Clearstream announce the renewal of contracts "...that were booked with major upstream, midstream and downstream energy companies across North America during the period from October 1, 2020 to the date of this press release [Feb 24, 2021]. These awards and renewals are estimated to generate approximately $150 million in backlog." A little further in the press release, we are told that "...most of the work will be executed in 2021 with the balance scheduled for 2022-2025."   Okay, so they're owed about $150M just from these aforementioned projects? That makes the large 200M number a little more palatable I guess. In fact, they had about 220M debt a the end of the December 31, 2019 fiscal year, which they brought down the following year to ~200M by the end of December 31, 2020. (Pretty impressive for a company so heavily tied to the oil and energy sector, which saw massive declines due to the COVID-19 pandemic). Feb 24, 2021 Press Release: https://finance.yahoo.com/news/clearstream-announces-project-awards-contract-221000599.html There was also an unfortunate incident in December 2020 where two Clearstream Employees were killed in an unfortunate dozer collision while working at the Suncor Fort Hills mining site. As far as I understand, the driver of the dozer was not a Clearstream Employee. Source: https://www.cbc.ca/news/canada/edmonton/suncor-workers-fatal-fort-hills-1.5856633 Technical Analysis: $CSM's Horoscope and Tarot Reading A very quick look at the 3-month chart shows two pretty large spikes in share price and volume; the first being at market open on February 25th (the day after the press release highlighting new contracts and renewals generating a 150M backlog), and the second on March 11th, one week after the company's 2020 Annual Financial results. (0.065 open, 0.09 close, 0.13 open the next day on March 12th). The stock has been bar-coding since then, with a handful of stock supporters claiming that, "it's due for a breakout of sorts." During those "pumps" (or whatever you wanna call it), volume went as high as 2 million on a given day, but has since receded to the 200-500k volume per day range. (439.79k average 10day volume listed on Yahoo Finance). Viewing the chart's maximum range, we see that this company was actually trading as high as 0.79 in 2014. This leads me to speculate (due to the amount of insider ownership, as well as institutional ownership) that there are probably consolidation levels MUCH higher than where the stock is currently trading at. It bottomed out at 0.01/share in December 2018 and has been on a very slow rise since then. Market ATH Screencap: https://imgur.com/pTvXneV Another thing to note is that Shares Short prior to Feb 26, 2021 was 1.47M. This number was reduced to 182.44k as of March, 31 2021; representing a closure of approximately 87.5% of short positions. So What's the Deal With This Company Then? I don't know. That's the reason I made this post. I just can't figure out why this company trades the way that it does. It's basically a large company with considerable value that trades like a penny stock on the TSX, instead of the respective OTC/venture markets. (There IS an American Pink Current version of the stock: $NWPIF). Wealthsimple doesn't even allow you to buy this stock because it falls below their minimum share price requirements, even though it's listed on the TSX. The company meets various revenues and earnings requirements for a NASDAQ listing, but is held back by its extremely low market capitalization and volume; which leads me to believe that maybe it's a matter of no one knowing this company exists. Some Wild, Over-The-Top Speculation with a Sprinkle of Wishful Thinking If this company traded at exactly HALF of its estimated Enterprise Value, each share would be worth $1.46 CAD. If it traded at 100% of its Enterprise Value (yeah, yeah i know), that would place it at approximately $2.92 CAD per share. The fact that they boast 4000+ employees and generate nearly ~400M revenue a year servicing critical oil and energy infrastructure, means there's more substance to this company than half the random stuff that trades on the TSX. Not to mention that they're PROFITABLE! One would think that this type of company would probably find its way into something like a clean energy ETF or a pension fund if it didn't trade like it was a nano-cap company. (Yeah, it seriously trades under the guidelines of a micro-cap company-- 50M-300M range).     TLDR Quicknotes 9.9M market cap, 321.32M enterprise value 109.99M shares outstanding. 10.79% shares owned by Insiders. 19.94% shares owned by Institutions. 74.74M float. 22.36% of float owned by Institutions. No Insider sales since 2017 393.121M (TTM) revenue, 16.925M (TTM) gross profit (36.686M gross annual profit for fiscal year ending Dec 31, 2020) Still profitable with a large amount of debt. Retained a profit in 2020 while industry peers were more adversely affected by the pandemic. 4000+ Employees (~2000 listed on LinkedIn) 87.5% of Short positions closed between Feb 26 - March 31, 2021     Extra Links & Conversations Company SEDAR Documents: https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00031411 Stockinvest Data: https://stockinvest.us/stock/CSM.TO Ceo.ca Conversations: https://ceo.ca/csm Yahoo Finance Conversations: https://finance.yahoo.com/quote/CSM.TO/community?p=CSM.TO As mentioned at the beginning of this post, I'm totally new to this and welcome any feedback (positive OR negative) regarding anything I may have missed, especially if there's something totally obvious that I'm overlooking.   Position: 5000 shares @0.085

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Grammerprog

Apr 18, 2021

-11.76%

Change % Since Posting

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Price When Posted

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Change Since Posting

CSM.TO

ClearStream Energy Services Inc.

0.07

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Current Price

CSM.TO - The Most Undervalued Company in the World?

bullish

First of all, this is not financial advice. I am a brand new investor trying to learn as much as I can everyday. I am nowhere near qualified to give any financial advice whatsoever, so take the following information as just the personal opinion of some idiot on the internet.

 

I recently ran into this company that seemed incredibly peculiar; from a financial perspective as well as from a trading perspective. You see, Clearstream Energy (TSX:$CSM.TO) (PNK:$NWPIF) is this Canadian company that services oil/energy infrastructure and has an Enterprise Value of approximately 321.32 million CAD, according to Yahoo Finance at the time of writing. Yet, the company trades on the TSX at a market cap of a mere 9.9 million?? ($0.09 CAD per share at the time of writing; a pathetic 3% of the estimated Enterprise Value).

 

A deeper dive into the company’s financials on Yahoo Finance shows that it has a Trailing Twelve Month (TTM) revenue of 393.121 million dollars, with a gross profit (TTM) of 16.925 million. Their Official Annual Report for the fiscal year ending December 31, 2020 records an even more impressive 33.686 million in gross profits during a year plagued by the height of the COVID-19 pandemic. In addition to that, their company website boasts over 4000 employees, though this value appears lower on other platforms like LinkedIn (~2000 employees listed).

 

Official Annual 2020 report : https://www.clearstreamenergy.ca/uploads/ClearStream_2020_Annual_Report.pdf

Yahoo Finance Statistics: https://finance.yahoo.com/quote/CSM.TO/key-statistics?p=CSM.TO

Fourth Quarter and 2020 Annual Financial Results Summary: https://finance.yahoo.com/news/clearstream-announces-fourth-quarter-2020-220000282.html

Company Website: https://www.clearstreamenergy.ca/about/who-we-are.html

 

 

Ok, sounds pretty interesting. Is there anything concerning about this company?

Yes, actually. A quick look at the company's balance sheet shows that they have almost 200M in debt (BIG YIKES!). The assets/liabilities ratio for the company doesn't look too great either. However, if we pull up the February 24th press release, we see Clearstream announce the renewal of contracts "...that were booked with major upstream, midstream and downstream energy companies across North America during the period from October 1, 2020 to the date of this press release [Feb 24, 2021]. These awards and renewals are estimated to generate approximately $150 million in backlog." A little further in the press release, we are told that "...most of the work will be executed in 2021 with the balance scheduled for 2022-2025."  

Okay, so they're owed about $150M just from these aforementioned projects? That makes the large 200M number a little more palatable I guess. In fact, they had about 220M debt a the end of the December 31, 2019 fiscal year, which they brought down the following year to ~200M by the end of December 31, 2020. (Pretty impressive for a company so heavily tied to the oil and energy sector, which saw massive declines due to the COVID-19 pandemic).

Feb 24, 2021 Press Release: https://finance.yahoo.com/news/clearstream-announces-project-awards-contract-221000599.html

 

There was also an unfortunate incident in December 2020 where two Clearstream Employees were killed in an unfortunate dozer collision while working at the Suncor Fort Hills mining site. As far as I understand, the driver of the dozer was not a Clearstream Employee.

Source: https://www.cbc.ca/news/canada/edmonton/suncor-workers-fatal-fort-hills-1.5856633

 

 

Technical Analysis: $CSM's Horoscope and Tarot Reading

A very quick look at the 3-month chart shows two pretty large spikes in share price and volume; the first being at market open on February 25th (the day after the press release highlighting new contracts and renewals generating a 150M backlog), and the second on March 11th, one week after the company's 2020 Annual Financial results. (0.065 open, 0.09 close, 0.13 open the next day on March 12th). The stock has been bar-coding since then, with a handful of stock supporters claiming that, "it's due for a breakout of sorts."
During those "pumps" (or whatever you wanna call it), volume went as high as 2 million on a given day, but has since receded to the 200-500k volume per day range. (439.79k average 10day volume listed on Yahoo Finance).

 

Viewing the chart's maximum range, we see that this company was actually trading as high as 0.79 in 2014. This leads me to speculate (due to the amount of insider ownership, as well as institutional ownership) that there are probably consolidation levels MUCH higher than where the stock is currently trading at. It bottomed out at 0.01/share in December 2018 and has been on a very slow rise since then.

Market ATH Screencap: https://imgur.com/pTvXneV

 

 

Another thing to note is that Shares Short prior to Feb 26, 2021 was 1.47M. This number was reduced to 182.44k as of March, 31 2021; representing a closure of approximately 87.5% of short positions.

 

 

So What's the Deal With This Company Then?

I don't know. That's the reason I made this post. I just can't figure out why this company trades the way that it does. It's basically a large company with considerable value that trades like a penny stock on the TSX, instead of the respective OTC/venture markets. (There IS an American Pink Current version of the stock: $NWPIF). Wealthsimple doesn't even allow you to buy this stock because it falls below their minimum share price requirements, even though it's listed on the TSX. The company meets various revenues and earnings requirements for a NASDAQ listing, but is held back by its extremely low market capitalization and volume; which leads me to believe that maybe it's a matter of no one knowing this company exists.

 

 

Some Wild, Over-The-Top Speculation with a Sprinkle of Wishful Thinking

If this company traded at exactly HALF of its estimated Enterprise Value, each share would be worth $1.46 CAD. If it traded at 100% of its Enterprise Value (yeah, yeah i know), that would place it at approximately $2.92 CAD per share.

 

The fact that they boast 4000+ employees and generate nearly ~400M revenue a year servicing critical oil and energy infrastructure, means there's more substance to this company than half the random stuff that trades on the TSX. Not to mention that they're PROFITABLE! One would think that this type of company would probably find its way into something like a clean energy ETF or a pension fund if it didn't trade like it was a nano-cap company. (Yeah, it seriously trades under the guidelines of a micro-cap company-- 50M-300M range).

   

TLDR Quicknotes

9.9M market cap, 321.32M enterprise value
109.99M shares outstanding.
10.79% shares owned by Insiders.
19.94% shares owned by Institutions.
74.74M float.
22.36% of float owned by Institutions.
No Insider sales since 2017
393.121M (TTM) revenue, 16.925M (TTM) gross profit (36.686M gross annual profit for fiscal year ending Dec 31, 2020)
Still profitable with a large amount of debt.
Retained a profit in 2020 while industry peers were more adversely affected by the pandemic.
4000+ Employees (~2000 listed on LinkedIn)
87.5% of Short positions closed between Feb 26 - March 31, 2021

   

Extra Links & Conversations

 

Company SEDAR Documents: https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00031411

Stockinvest Data: https://stockinvest.us/stock/CSM.TO

Ceo.ca Conversations: https://ceo.ca/csm

Yahoo Finance Conversations: https://finance.yahoo.com/quote/CSM.TO/community?p=CSM.TO

 


As mentioned at the beginning of this post, I'm totally new to this and welcome any feedback (positive OR negative) regarding anything I may have missed, especially if there's something totally obvious that I'm overlooking.  

Position: 5000 shares @0.085

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