Texas Pacific Land is a real estate company with a unique and successful business model that should be a part of any long-term growth portfolio. Founded in 1871 as the Texas and Pacific Railway Company, the company now holds vast amounts of land in Texas and receives royalties on various economic activities happening on these properties.
The company has two main revenue streams: oil royalties and a high-growth water business. Despite natural risks related to energy demand and management complacency, Texas Pacific Land remains an attractive long-term investment with high margins and growth potential.
While often mistaken for an energy company, Texas Pacific Land is primarily a real estate company that leases land to oil-producing tenants like Exxon Mobil and Chevron. The company also has a growing water business, which has shown significant revenue growth in recent years.
With a pristine balance sheet, no debt, and a strong cash position, Texas Pacific Land has the financial stability to support its growth initiatives. The company prefers reinvesting in the business and buying back shares over paying dividends, which may not appeal to dividend investors but benefits long-term shareholders.
Despite its slightly expensive valuation, Texas Pacific Land’s high margins and growth profile make it a promising investment for the future. Risks include fluctuations in energy demand and the possibility of management complacency, but the company’s strong leadership and strategic investments mitigate these concerns.
In conclusion, Texas Pacific Land is a compelling choice for investors looking for long-term growth opportunities in their portfolio. Its unique business model, high margins, and growth potential make it a valuable asset for any investor seeking exposure to real estate, oil, renewable energy, and infrastructure sectors.