MXC

Mexco is a tiny non-operated Permian royalty/working-interest player whose appeal is its fortress balance sheet, not its growth. FY2026 stockholders' equity of $20.0M against just $1.71M of total liabilities (0.09x liabilities/equity) and $2.78M of cash (up 58%) leaves it effectively debt-free, and the equity works out to ~$9.76/share versus the $8.14 price — the stock trades at roughly 0.83x book. The 10-K's PV-10 of $21.1M and standardized measure of $18.7M both sit above the $16.7M market cap, so you are buying the proved-reserve base at a discount. Reserves actually grew modestly to 1.437M BOE (from 1.401M) as 57 horizontal wells and acquisitions more than replaced production, which supports durability of the asset.

The problem is the earnings direction and quality. Revenue fell 8.1% to $6.56M and net income dropped 23.7% to $1.31M, with diluted EPS down 22.2% to $0.63 — the third straight year below the FY2023 peak ($9.56M revenue, $4.66M NI) that was driven by high commodity prices. The SEC 12-month average oil price used for reserves fell 15% to $62.76/bbl and the March-31 benchmark dropped to $59.79 from $71.00, directly pressuring both revenue and reserve value (PV-10 already slipped from $23.2M to $21.1M). ROE is only 6.5%, so despite the clean balance sheet the business is not compounding capital attractively, and a ~1.2% dividend ($205K) is a modest offset.