The Long Case for CE Franklin (CFK)

| About: National Oilwell (NOV)

CE Franklin, Ltd. (CFK) operates as a distributor of oilfield supplies to producers of oil and gas in Canada. It distributes pipe, valves, flanges, fittings, production equipment, tubular products, and other general oilfield supplies. (Y! Finance)

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