Oil and gas/engineering

With all the newly announced oil and gas infrastructure realignment/development, to avoid complete and total geopolitical dependence on hostile regimes, companies like Worley (WOR) and Monadelphous (MND) should have LNG work coming out of their ears, over time.

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Mono’s (MND) in our view, is deeply unloved and underappreciated by the market. They’ve done an excellent job of converting the 2014-2015 LNG project work into recurring maintenance reviews. The fact that global exploration and production capex declined by over 80% since 2014 is obviously bad, for Mono’s, but they’ve navigated that headwind as well as one can, I think.

Consequently, the hurdle to generate a “market like” rate of return, is quite low, and it would appear that consensus earnings are tracking ahead of that log-linear required eps growth trajectory (which would be a bullish signal).

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Worley is the higher profile, larger, and arguably pre-eminent engineer in the space (up there with Bechtel) and likewise has material leverage to increased project work involving hydrocarbons.

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