The longtime energy industry landlord could benefit handsomely from entering new businesses.
On a trading day where the bears largely had their way, Texas Pacific Land Corporation (TPL +0.81%) stock landed in the black on Monday. Its share price closed 0.6% higher, thanks in no small part to an analyst price target increase, which looked impressive next to the S&P 500 index’s more than 1% decline.
The new “black gold”
Texas Pacific, which is basically a landlord with vast holdings in the oil-rich Permian Basin, is now worth $639 per share, according to KeyBanc’s Tim Rezvan. That’s quite a change from the pundit’s preceding level, which was $350. In making the adjustment, Rezvan held fast to his overweight (read: buy) recommendation on Texas Pacific’s equity.
Image source: Getty Images.
According to reports, the analyst was particularly encouraged by the scope for building out power generation and/or data center facilities on Texas Pacific’s land. Such facilities need considerable space, which the company has in abundance. Rezvan believes it is also very well positioned to draw on land and water assets that will feed these kinds of plants.
The data center segment, in particular, is white-hot these days, as such facilities are being built (or retrofitted) to meet the relatively high resource demands of artificial intelligence (AI) technology.
Today’s Change
(0.81%) $4.03
Current Price
$503.91
Key Data Points
Market Cap
$34B
Day’s Range
$502.18 – $547.20
52wk Range
$269.23 – $547.20
Volume
51K
Avg Vol
460K
Gross Margin
85.46%
Dividend Yield
0.43%
A true 21st century land baron
The Keybanc pundit also opined that, these days, this kind of opportunity is becoming more of a “when” than an “if” for Texas Pacific. While the company is sure to continue making the bulk of its revenue from its traditional energy industry tenant base, this is quite a juicy opportunity I’d imagine it’ll eagerly capitalize upon.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.