Need More Oil Exposure? Try FMC Technologies

FMC Technologies (FTI), a deepwater equipment manufacturer, has moved very aggressively in the past couple of trading days, hitting new 52 week highs each of the last two days. You should wait for a pull back of up to 5% before considering this growth company, but if you need some additional oil equipment exposure in your portfolio, this is a great stock and company to consider.

The company recently reported double-digit unit growth in the first quarter. In addition to a very good quarter that beat estimates, FMC Technologies signed a contract with Devon Energy (DVN) for sub-sea services within the past week. In addition, the company is planning on spinning off a new company, its John Bean subsidiary, in the near future. This unit provides foot processing and air transportation technology. Owners of FTI will receive .215 shares of the new stock when the transaction occurs.

With 32% sales growth and 33% earnings growth and up trending earnings expectations going forward, you could hold this stock for the next quarter and do quite well. FMC Technologies has beaten expectations the last four quarters and analysts continue to raise their expectations from 67 cents 90 days ago to 72 cents at the current time. The price to earnings ratio is 32, which makes the stock a little on the expensive side, but it should continue to move with the recent news events, the strong uptrend in the United States Oil Fund (USO) ETF, and the company spin off that is planned.

Disclosure: none

Comments

[Brian Pursley:]

Hi Steve. For some reason we have a tendency to be looking at the same companies at the same time (NOV, RIG, FTI). Coincidence? Haha.

Anyway you might find this interesting. FTI had a booth at the OTC (Offshore Technology Conference) in Houston this past week. FTI was presented with a 2008 Spotlight on New Technology Award for its Enhanced Vertical Deepwater Tree.

I guess it's no wonder that Devon and Anadarko are customers.

FTI 1 - Competition 0

2008 May 11 11:03 AM

[golds:]

Oil exposure is risky at this level except for moving oil. IPO tanker company from last November is making some significant progress. Q4 07 earnings were $0.115 but for only 13 days of December due to the IPO.

Here is Q1 data and guidance from TNK all packaged together in 1 place. 14% yield with higher future prospect Q2 Q3 and Q4. Tanker companies don't typically see this type of growth.



TNK presentation

Q1 EPS = $0.76
YRLY EPS = $3.04

The company just bought two new Suezmax tankers on credit and you can see that the profits will go up based upon this purchase and the currently highly spot rates. Download the guidance chart from TNK directly.

link to divided payout schedule (guidance chart) based upon spot rates
www.teekaytankers.com/...
download 48kb 3 page file and look at dividend spreadsheet.

Here is the data you need to do the calculations - this data was acquired from a professional source confirmed to be accurate with TNK.

04/04/08
VLCC $95,263
SUEZMAX $60,471
AfraMAX $41,447

I watch and record the weekly spot averages for all tanker types.
The above list is the Average tanker daily spot rate as of the end of Q1. Q2 is higher already.


Here is the latest average including every week from Jan 1 to today.
05/02/08
VLCC $96,718
SUEZMAN $72,152
AFRAMAX $46,545

For those of you too lazy to download this critical guidance here is the brief summary.

Current Q1 spot rates

20,000 = dividend $1.64
25,000 = dividend $1.99
30,000 = dividend $2.34
35,000 = dividend $2.69
40,000 = dividend $3.04 ***** here we are

Download the full chart to see how the two new suezmax tankers effect income (its dramatic).

2008 May 12 01:28 PM

[Brian Pursley:]

houston.bizjournals.co...

2008 May 23 10:02 AM