4/13/2016
By Charles Payne, CEO & Principal Analyst

Like all businesses in the fracing (or fracking) universe, the company has been focused on surviving the oil rout, and I think they’ve pulled it off admirably.  Moreover, the company continues to develop and deploy new products and technologies.  Fracing (the injection of fluid into shale beds at high pressure in order to free up petroleum resources such as oil or natural gas)  has been a miracle for America and is sure to be replicated around the world.  To that end, the company’s business outside the United States as percentage of total continues to climb.

• 2013 21%
• 2014 24%
• 2015 29%

The balance sheet is strong coming into the year, with current assets of $285.3 million from $337.6 million.  Meanwhile, while pricing power has diminished, a spike in sand volume is a positive sign.

The company faces macro challenges from oil demand around the world, and on a micro level, from cheap inferior ceramic inventories that are still being worked off.   That happens as crude edges toward $50.00, but even with its higher-end products, the value proposition from more effective drilling should dictate demand. 

A close above $16.50 is a technical breakout, and through there, the stock has room to $23.00 near term.  To be sure, this is a greater-than-average risk, but we think the stock is oversold.   This doesn’t mean we buy or add here, but as crude moves higher, there should be a major spurt in the share price.  

Charles Payne
Wall Street Strategies

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