Catalysts that make CFK a buy:
• CFK has no analyst coverage; it is largely flying under Wall Street's radar. In the past five years CFK has grown its EPS by 75%+ & is trading at a multiple of 16. Revenue grew from 200 to 400 million & EBITDA grew from 1 million to over 27 million between '03-'05. Looking at the bottom line in those two years, it has grown exponentially from 300K to 16 million. CFK has also produced record breaking results for the 12 Qs in a row YOY. With such stellar results, I believe analysts will be jumping on the bandwagon and upgrading CFK to buy once it reports results.
• If you believe the Canadian dollar will gain in strength against the US dollar then CFK is a play for that too, since CFK is Canadian. Not only that: if and when the Canadian dollar appreciates above the US dollar, this would increase margin expectations and EPS, resulting in an earnings surprise in the Qs ahead.
• If oil keeps hovering above $55-60, CFK could be a good play on Canadian Oil Sands too. With a busy season of hurricanes ahead & the geopolitical tensions, I see no reason why oil should come down. With 5.3% GDP growth in the U.S., solid growth around the EU (Germany especially) & BRIC, the demand for CFK's industrial products will remain strong.
• The rig count for 05 was 538 active rigs, which represents a 66.6% increase YOY. The 55.7% improvement in sales reflects strong commodity prices, improved industry economics resulting in an increase in drilling activity, coupled with an increase in market share for all product groups as a result of the Company's service, sales and marketing efforts.
CFK 1-yr Chart
Disclosure: I do not own the stock