ENGlobal: Engineering oil projects
Oil isn’t going away any time soon.
That, in a nutshell, is the investment thesis behind ENGlobal Corp. (Nasdaq:ENG), a Houston company that provides engineering services to the oil industry and has seen its earnings and its stock price surge in recent months in a way that’s mirrored the rising cost of oil itself over most of the summer.
The company’s shares closed Wednesday at $17.69, down slightly from the all-time high of $18.37 a day earlier. as the company continues to ride the momentum of a surprisingly strong second quarter report earlier this month, when earnings of $0.24 came in $0.08 higher than the consensus forecast.
While nobody should be surprised that one of the relatively few stocks currently trading near its high is the stock of a company in the oil industry, ENGlobal is not an actual oil drilling company. Rather, it provides engineering services to oil companies working on building and upgrading refineries and pipelines and conducting feasibility studies on new projects. As such, it stands to profit from growing worldwide oil demand for a long time, even if crude oil prices and U.S. oil demand continue the retreat they have shown in recent weeks.
That’s because even under the most optimistic assumptions for a shift away from oil to cleaner-burning fuels, oil will remain a major energy source for years to come and the oil industry will have to upgrade its infrastructure by building new refineries and enhancing existing ones to support demand. Aging, inefficient refineries in the United States have recently come under the spotlight as a key factor exacerbating . . .
That, in a nutshell, is the investment thesis behind ENGlobal Corp. (Nasdaq:ENG), a Houston company that provides engineering services to the oil industry and has seen its earnings and its stock price surge in recent months in a way that’s mirrored the rising cost of oil itself over most of the summer.
The company’s shares closed Wednesday at $17.69, down slightly from the all-time high of $18.37 a day earlier. as the company continues to ride the momentum of a surprisingly strong second quarter report earlier this month, when earnings of $0.24 came in $0.08 higher than the consensus forecast.
While nobody should be surprised that one of the relatively few stocks currently trading near its high is the stock of a company in the oil industry, ENGlobal is not an actual oil drilling company. Rather, it provides engineering services to oil companies working on building and upgrading refineries and pipelines and conducting feasibility studies on new projects. As such, it stands to profit from growing worldwide oil demand for a long time, even if crude oil prices and U.S. oil demand continue the retreat they have shown in recent weeks.
That’s because even under the most optimistic assumptions for a shift away from oil to cleaner-burning fuels, oil will remain a major energy source for years to come and the oil industry will have to upgrade its infrastructure by building new refineries and enhancing existing ones to support demand. Aging, inefficient refineries in the United States have recently come under the spotlight as a key factor exacerbating . . .
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About the Author
Contributing author Andrea Orr has worked as a financial and business journalist for more than 15 years in New York, Los Angeles and northern California.