Winner and Sinner: Woodside stock looks dirt cheap, whilst Megaport shares could have even further to fall

One ASX 200 stock that's dirt cheap, and one that still looks expensive.

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Winner

The Woodside Energy Group Ltd (ASX: WDS) share price has gained $1.65 or 5.1% to $34.20 in Thursday morning trade after the oil and gas producer reported record third-quarter production, sales volume and revenue, up 52%, 59% and 70% respectively for the previous quarter.

Strong operational performance across the combined portfolio allowed Woodside to upgrade its full-year production guidance by around 5%.

Woodside shares trade on a trailing fully-franked dividend yield of around 9%, making them one of the highest-yielding ASX 200 stocks. On top of that, the company trades on a forward forecast price-to-earnings (P/E) ratio of under 9 times earnings.

Woodside is a beneficiary of the high oil and gas prices, and the lower Aussie dollar. It's hard to imagine a better macroeconomic environment, yet at the same time, it's equally hard to imagine what could derail the Woodside juggernaut.

In August, the company said the upheavals in global and Australian energy markets have shone a spotlight on the importance of gas in the world's energy mix, underscoring the company's confidence in the longer-term demand outlook for gas, which makes up 70% of Woodside's portfolio.

Sinner

The Megaport Ltd (ASX: MP1) share price plunged 22% to $6.61 yesterday after the network-as-a-service provider released a lacklustre first-quarter trading update

Once a tech stock darling, Megaport shares have fallen almost 70% from their 52-week high, with the company now valued at just over $1 billion.

The company is a high-profile holding in the Firetrail Australian Small Companies Fund, and in June this year, amid an earnings miss, the fund said it "has added capital to the Megaport position on the back of the share price weakness and our conviction in the medium-term outlook for the company".

In its September update, Firetrail said an analyst report highlighted that Megaport's first mover advantage continues to widen, the fund also saying "pricing across the sector has started to increase which, combined with a falling AUD, should benefit the company in the short term".

I don't get it with Megaport. For the month of September, its reported monthly recurring revenue increased by $913,000 quarter on quarter. That's chicken feed for a company with a market capitalisation of over $1 billion, and one which saw its cash balance fall in the quarter to $69 million.

With highly valued tech stocks, even if they are loss-making, I like to see them growing revenues like gangbusters, allowing them to grow into their valuation. No such joy at Megaport, where revenue for the quarter grew 10% quarter on quarter to just $34 million. At this rate of progress, it's going to take a very long time for Megaport to grow into its still lofty valuation.

Motley Fool contributor Bruce Jackson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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