Today's share market is a very different place from what it was just 18 months ago.
Back in October 2021, it was hard to believe that growth shares would suddenly plunge off the cliff and that energy stocks would start to rule as one of the superpowers invaded a far smaller neighbouring country.
Then to rub salt into the wound, the Reserve Bank of Australia subsequently hiked up interest rates for ten consecutive months.
It might be incredible, but that's exactly what happened. So all investors need to adjust their parameters and expectations.
In this spirit, Glenmore Asset Management portfolio manager Robert Gregory recently mentioned a stock he's backing that would have been firmly out of fashion at the start of last year:
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I bet you weren't thinking of this stock in 2021
MMA Offshore Ltd (ASX: MRM) provides equipment and services for the offshore energy sector.
From its August 2018 peak to the end of 2021, the stock lost almost 80% in value, perhaps reflecting the market's aversion to any business related to fossil fuels.
But in the 16 months since the MMA Offshore share price has more than tripled.
Incredibly, Gregory doesn't think it has finished its run yet.
"With both oil and gas and offshore wind sectors having positive outlooks for the next two to three years at least, we believe the earnings outlook for MMA Offshore is very promising," he said in a memo to clients.
The current stock price is still "attractive", he believes, trading at a "slight discount to net tangible assets and an FY23 EV/EBITDA multiple of ~6x".
The business has 18 vessels globally and earns the bulk of its revenue from leasing those ships.
"After a tough cyclical downturn of depressed activity from its client base, MMA Offshore is now benefiting from stronger demand, which has seen its key metrics (day rate, utilisation rate, earnings) all rapidly improving."
Plus it's earning new clientele, which provides an optimistic outlook.
"During the month, MRM announced it was awarded three contracts supporting offshore wind farms in Taiwan, which will add $30 million of revenue."
Gregory is not the only one bullish on this small-cap stock.
Last month, Discovery Fund portfolio manager Chris Bainbridge told The Motley Fool that MMA Offshore is one of his hot buys.
"Looking ahead… day rates probably need to go up another 50% to justify anyone building a new vessel. And when they build a new vessel, there's a three-year wait time on that vessel," he said.
"So it's a really great environment at the moment to be [an] offshore service vessel provider — and that's where MMA is."
