Organic Growth: ESP Resources, Inc.

| About: ESP Resources, (ESPIQ)

When seeking a company with historic top line growth, a suggested buy is ESP Resources, Inc. (ESPI.OB). The company specializes in chemical equipment and services for hydraulic fracturing, or fracking. ESP Resources has developed a chemical formulation that addresses one of the foremost issues in the fracking process: bacteria contamination.

ESP Resources' bacteria contamination process provides customers with significant cost savings because of the company's unique process which reduces the chemical time from up to two months to a few days or hours when combating contaminants.

With an increase in demand for cost-saving products and services in the petrochemical industry, ESP Resources has experienced exponential growth in its customer base, both in domestic and in international markets. This higher volume business has resulted in increased margins and reduced prices for utilized raw materials. These two factors have also contributed significantly to lower per unit material costs.

Underlying the expansion of the industry and the company is the sector wide backlog of fracturing work which is fueling-in particular-the North American market. This market alone is anticipated to grow by $12.4 billion-per year-by 2020. As projected by Morgan Stanley, the petrochemical industry is entering its strongest period of demand in the last 20 years. Production estimates in the U.S. alone stand at 89 billion barrels, utilizing the technologies ESP Resources services.

For more than 60 years, the oil and gas chemical industry, along with fracking, has been on the rise; currently there are over one million wells in the U.S. Today, fracking accounts for over seven billion barrels of oil and over 600 trillion cubic feet of natural gas.

Last year, as a result of the company's efficient processes and seasoned management team, ESP Resources signed a joint venture related to the development of the KOMO International Airfield, which is engaged by Exxon Mobile (NYSE:XOM).

The company has grown organically over the last several years, as topline growth exceed $ 12 million in 2011. In addition to the KOMO deal, ESP Resources has expanded into the Papua New Guinea market with contract partnerships that include the UAE, as well as significant NYSE listed partner companies in the domestic market.

For the year ended 2012, the company's revenue is expected to show approximately $19M in sales, which demonstrates its significant year over year growth.

Large chemical suppliers, which include ExxonMobil, Baker Hughes (NYSE:BHI), Dow Chemicals (NYSE:DOW) and Union Carbide, dominate the upper market, while an array of small suppliers persist at a local level. ESP Resources, meanwhile, has found a niche in the middle market. The company has achieved this by customizing quantity, determining precise chemical blend and partnering to find solutions to injection difficulties.

In the U.S. domestic market, the company has experienced two-to three-digit growth revenue rates since its inception in 2007. Gross margin, meanwhile, is expected to grow to 43%. Gross revenue for the U.S. domestic market is anticipated at 50%.

To meet these new demands, ESP Resources has increased its foothold in international markets by growing new divisions within its internal structure. These new divisions include ESP Facility and Pipeline Services, which offer technical support and services for onshore and offshore production. The company is also expanding its contracts in the domestic market. This growth has resulted in accretive earnings to date.

Given the company's record, we anticipate further positive earnings throughout 2013.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.