One of the hardest decisions an investor is faced with is when to sell. There is always the worry of selling too early or not selling soon enough, which can leave you with analysis paralysis. That’s why a buyout can sometimes be an investor’s best friend because it can take the guess work out of when to sell. While there are plenty of potential buyout candidates out there, the following two companies are being built to sell by management teams that have done it before. That makes these two the best stocks to buy if you’re hoping to someday cash out.
Clean up with this stock
Topping my list of best stocks to buy for a future buyout is Nuverra Environmental Solutions Inc (NYSE:NES). Founder Richard Heckmann and CEO Mark Johnsrud have both built and sold companies in their past, which is one reason I think Nuverra Environmental Solutions Inc (NYSE:NES)’s future likely ends with it being sold. That being said, a sale is likely years away as the management team is just beginning to build something great.
What the team is building is a full-cycle environmental solution for oil and gas exploration companies. The company can deliver, collect, treat, recycle, and dispose of the water used in fracking. In addition to this, it is expanding its offerings into solid waste disposal while it had multiple opportunities to develop complimentary environmental solutions in the future.
To date, Nuverra Environmental Solutions Inc (NYSE:NES) has built a substantial asset base to serve most of the major shale plays as you can see from the following chart:
Source: Nuverra Investor Presentation.
The company has a long way to go before its management team, which owns a substantial stake in it, would consider putting it up for sale. Its stated goal is to deliver more than $1 billion in annual revenue and this year it expects to deliver between $750 million to $825 million in revenue. I’d expect it to continue to build and buy new lines of business in order to bring its revenue well in excess of $1 billion annually before the management team looks to exit. Even without a sale this is one of the best stocks to play the growth in shale oil and gas production.
Soar higher with this oil stock
Oil and gas driller Halcon Resources Corp (NYSE:HK) is another that’s being built by a team with experience in selling a company. In Halcon Resources Corp (NYSE:HK)’s case, CEO Floyd Wilson built Petrohawk Energy and sold it to BHP Billiton Limited (ADR) (NYSE:BHP) for $15 billion. BHP Billiton Limited (ADR) (NYSE:BHP), which was looking for a way to put its massive war chest to use and was able to snap up great assets and technical know-how to develop shale gas resources.
Now Wilson is at it again, this time focusing on liquids-rich development plays in the U.S. A sale in the future is very likely here as in the process of forming Halcon Resources Corp (NYSE:HK), which means hawk in Spanish, Wilson was quoted as saying that, “One day we’ll sell to some big, smart company.” He views the company as the sequel to Petrohawk, or simply a continuation of his build-to-sell strategy.
Like Nuverra Environmental Solutions Inc (NYSE:NES), investors shouldn’t expect a deal anytime soon. Halcon Resources Corp (NYSE:HK) is still very early in the build cycle having amassed acreage across several different liquids-rich areas including the Bakken and the Utica as you can see from the map below:
Source: Halcon Resources investor presentation.
