Technology is transforming the domestic energy industry. The United States has gone from importing 60% of its energy needs in 2005 to just 47% currently, despite an administration hostile to the fossil fuels business. Fracking and other technologies are increasing both domestic gas and oil supplies at a rapid clip and the industry has created one of out of every five jobs since the recession ended. This revolution is likely to continue for at least a generation. Here are two small oil services stocks that are dirt cheap, growing rapidly and could easily find themselves bought out by a larger entity at some point in the future.
C&J Energy Services (NYSE:CJES)
C&J Energy Services, Inc., through its wholly-owned subsidiary, C&J Spec-Rent Services, Inc., provides specialty equipment services for oil and natural gas exploration and production companies in the Texas, Louisiana, and Oklahoma regions of the United States. The company offers hydraulic fracturing, coiled tubing, and pressure pumping services. Its fleet includes 4 hydraulic fracturing fleets, 13 coiled tubing units, 16 double pump pressure pumps, and 9 single pump pressure pumps. (Business description from Yahoo Finance)
4 reasons why CJES is significantly undervalued at under $22 a share:
- Insiders made some major buys in late July at higher levels.
- Consensus earnings estimates for 2011 and 2012 have risen over the last 30 days and CJES is priced at just over 7 times this year’s EPS.
- CJES is selling at significantly under analysts’ price targets.The median analysts’ price target on C&J is $31 and Dahlman Rose just initiated coverage with a “buy” in September.
- It has as a five year projected PEG of a very low .31 and is selling at a forward PE of just over 5.
Basic Energy Services (NYSE:BAS)
Basic Energy Services, Inc. provides a range of well site services to oil and natural gas drilling and producing companies in the United States. The company?s Completion and Remedial Services segment provides pressure pumping services, such as cementing, acidizing, fracturing, coiled tubing, nitrogen, and pressure testing; rental and fishing tools; cased-hole wireline services; underbalanced drilling in low pressure and fluid sensitive reservoirs; and snubbing services.(Business description from Yahoo Finance)
4 reasons Basic Energy is a solid buy at under $19 a share:
- BAS is under analysts’ price targets.The consensus analysts’ price target on BAS is $27
- It is experiencing rapid EPS growth.BAS lost $1.14 a share in FY2010, is expected to make $1.93 and projected to earn $2.51 in FY2012.
- Insiders made significant buys in August and September at these price levels.
- The company is expecting 70% growth in revenues this year and consensus has the company growing sales at a 20% clip in 2012.It also is selling for less than 4 times trailing operating cash flow.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CJES over the next 72 hours.