SGU

Star Group is a boring, deeply-cyclical home heating oil and propane distributor trading at a rock-bottom 0.2x sales and roughly 5.8x its FY2025 net income of $73.5M on a $425M market cap. The market prices SGU as a melting ice cube — and it partly is — but FY2025 shows a business executing well within that reality. Net income more than doubled (+108.7% to $73.5M), gross profit rose 12.2% to $563M, and operating income jumped 87.3% to $114M. The MD&A is candid that a chunk of the year's strength was weather: fiscal 2025 was 8.2% colder than the prior year, which lifts delivery volumes and receivables. That is the core tension — this was a good-weather year, and heating-degree-days are not a durable growth engine.

The quality of the franchise, though, is better than the 0.2x multiple implies. Management is running the classic disciplined-consolidator playbook: it deployed ~$80.5M on one heating-oil and three propane acquisitions (skewing toward propane, the less-declining fuel), while simultaneously shrinking the unit count 4.6% via a 1.3M-unit / $15.6M buyback and paying $26.1M in distributions. Long-term debt fell 11% to $167M and the revolver was drawn and fully repaid within the year — a lightly-levered balance sheet for this cash-flow profile. Shrinking the share count while buying cash-flowing propane routes is exactly how a no-growth distributor compounds per-unit value.