ProFrac Holding Corp. (ACDC): A Bull Case Theory

We came across a bullish thesis on ProFrac Holding Corp. (ACDC) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on ACDC. ProFrac Holding Corp. (ACDC)’s share was trading at $7.30 as of Feb 7^th. ACDC’s trailing and forward P/E were 93.91 and 16.16 respectively according to Yahoo Finance.

ProFrac Holdings (ACDC) is positioning itself as a dominant force in the hydraulic fracturing industry through aggressive consolidation and vertical integration. Despite stagnant stock performance, the company’s strategic acquisitions and cost efficiencies set the stage for a strong rebound as the energy market recovers.

ACDC owns eight sand mines and a full frac truck maintenance, design, and manufacturing division, allowing it to control costs and scale operations effectively. Management has aggressively acquired competitors, including a recent deal in Midland, Texas, enhancing its market share. While the current frac cycle downturn has pressured U.S. producers, ACDC is poised to benefit from a market upswing, particularly as new natural gas export terminals come online in 2025.

Unlike competitors that emphasize capital returns, ProFrac Holdings (ACDC) has focused on aggressive expansion, accumulating $1.1 billion in debt to strengthen its market position. While this leverage introduces risk, it also enhances the company’s upside potential in a market recovery. With a peak-cycle EBITDA projection of $1.5 billion—significantly higher than its current valuation—ACDC appears undervalued, trading at just 0.52x sales. This suggests substantial room for multiple expansion, with a price target of $34.38 by the end of 2027, up from its current $7.30.

With a rebound in frac fleet utilization and rising demand for natural gas services, ACDC is well-positioned for a breakout. Investors willing to weather short-term volatility could see substantial gains as the market cycle turns.

ProFrac Holding Corp. (ACDC) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held ACDC at the end of the third quarter which was 14 in the previous quarter. While we acknowledge the risk and potential of ACDC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ACDC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.