Growth Stocks Trading At Reasonable Prices
In 1888, the Texas and Pacific Railway went bankrupt. Stockholders lost everything but bondholders ended up owning the railroad’s land holdings, now called the Texas Pacific Land Trust (TPL).
Based in Dallas, the trust, still traded on the New York Stock Exchange, owns about 900,000 acres of land in West Texas and rents it out for cattle grazing and oil exploration. It also actively buys and sells parcels of land.
For the past five years, this land trust has shown 48% average annual earnings growth; last year was even faster. Encouragingly, TPL has shown a profit each year in the past 15 years. Another strong point: It has enough cash to cover all of its debt.
The stock sells for 17 times earnings.
What debt?
The Texas Pacific Land Trust Investor 
I submitted a revision to him.
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Dear Ezra,
Currently TPL has $3.5 million in lease obligations that count as debt.
It had no debt whatever for many years through 2018.
I could have put the point more strongly – I think TPL has enough cash to cover its debt 76 times over.
Thanks and kind regards,
John
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The “debt” is a product of a new accounting pronouncement, IIRC. So the commitment has always existed, but is now reported on the balance sheet.
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