Tag - Ttes

Companies that manufacture drilling equipment are gushing earnings because of drilling activity fueled by record oil prices. T-3 Energy Services, Inc. (NASDAQ:TTES) manufactures so-called blowout preventers (BOPs) used on wells to prevent disasters. Circor International (NYSE:CIR) produces a variety of valves used on oil and gas wells and pipelines. 

T-3 recently shifted its focus from rebuilding and servicing other companies’ equipment to manufacturing its own equipment. This strategy shift was in response to customer requests. Its drilling customers desperately needed more subsea blowout preventers but were experiencing lengthy delays on new orders. BOPs are car-sized valves installed on wellheads that instantly seal off the well when excessive pressure is detected. T-3 added these devices to its product line last year by acquiring Energy Equipment and HP&T Products, two related companies that manufacture deep sea BOPs and related equipment. These acquisitions gave T-3 access to new technologies and markets and manufacturing capabilities at 21 locations across North America.

The company is benefiting from robust demand for its blowout preventers. Sales grew 33% last year to $217.4 million, from $163.1 million in 2006, while net income jumped 40% year-over-year to $25.3 million, or $2.15 per share, from $18.1 million, or $1.71 per share. With drilling activity on the rise, demand for blowout preventers continues to expand. China and Russia are expected to deploy 200 new drilling rigs per year over the next several years, and an additional 149 new offshore rigs are scheduled for delivery between 2008 and 2011...

Ian Wyatt is the chief investing strategist of SmallCapInvestor.com and the chief executive officer of Bushiness Financial Publishing, a publisher of both free and paid subscription newsletters, e-letters, special reports and financial websites. Prior to Business Financial Publishing, Wyatt launched BizFN.com, a free investment website where individual investors could access research and analysis from money managers and financial advisors around the country. In 2007, Wyatt was selected as one of 60 entrepreneurs to participate in the Entrepreneurial Masters Program (formerly Birthing of Giants) at the Massachusetts Institute of Technology Sloan School of business, a three-year executive development education program.

What qualities do you look for in a small-cap stock? Have your criterion changed given the current macro environment?

“Increasing cash flow remains the single best measure to separate the haves from the have-nots. If a firm’s cash flows aren’t increasing, be wary. We look for strong top and bottom-line growth of 25% or greater on a quarterly and annual basis, a build up of cash on the balance sheet, a trend of successive upside earnings surprises and upwardly revised estimates. The company should operate in a favorable industry and markets that contain extraordinary growth potential.

“In the current environment we wouldn’t expect to find as many companies with 25% revenue and earnings growth, so in that sense, yes my expectations have been lowered. We pay closer attention to guidance in this environment, as the probability for downgraded outlooks is more likely.”

What are your favorite small-cap stocks with market caps of under $1 billion for the year and why?

“T-3 Energy Services (Nasdaq:TTES), Life Sciences Research (NYSE:LSR), Cano Petroleum (AMEX:CFW) and Merit Medical Systems (Nasdaq:MMSI) because of the specific niches they operate in.

“T-3 Energy manufactures and repairs equipment used in the drilling and completion of new and existing oil and gas wells, and for the production and transportation of oil and gas. The company has three product lines: pressure and flow control, wellhead and pipeline. Since April 2003, T-3 Energy has introduced 43 new products. As of March 9, the company had 18 manufacturing facilities located throughout North America.

“Equipment failure in the energy industry is not an option and as such T-3 Energy’s customers — namely many of the big exploration and pipeline companies . . .

AZZ inc (Nasdaq:AZZ), T-3 Energy Services Inc (Nasdaq:TTES) and Finish Line Inc (Nasdaq:FINL) are among the new 52-week highs in Tuesday's trading among companies with market capitalizations under $1 billion.

Here are the new 52-week highs among small caps:

Brigham Exploration Co. (Nasdaq:BEXP), Rex Energy Corp. (Nasdaq:REXX) and Exponent, Inc. (Nasdaq:EXPO) were among the new 52-week highs established during Tuesday's trading among companies with market capitalizations or values under $750 million.

T-3 Energy Services, Inc. (Nasdaq:TTES), United States Oil Fund LP (AMEX:USO) and CP HOLDRS (NYSE:HCH) were also among the 52-week small-cap highs.

Here are Tuesday's 52-week small-cap highs:

T-3 Energy Services, Inc. (Nasdaq: TTES)
Houston, Texas
http://www.t3energyservices.com
 
52-week low / high: $18.72 / $53.41
Shares Outstanding: 12.21 million
Market Capitalization: $546 million

Finding a company that is a diamond in the rough of today’s market can be difficult. Enter T-3 Energy Services, Inc. (Nasdaq: TTES). In the face of an ugly market marked by whipsaw volatility, the company’s technicals and fundamentals have held strong.

After the market peaked in October 2007 only to begin tumbling downward, T-3 Energy has since continued its assent upward and beaten the S&P 500 by 30%.

T-3 Energy manufactures and repairs equipment used in the drilling and completion of new and existing oil and gas wells, and for the production and transportation of oil and gas. The company has three product lines: pressure and flow control, wellhead and pipeline. Since 2003, T-3 Energy has introduced 86 new products.  It markets its products to drilling contractors, exploration and production companies and pipeline companies. Demand for its products stems from exploration and development activity levels, which in turn are directly related to current and anticipated oil and gas prices. As oil prices have sky rocketed and the crusade to quench America’s thirst for oil has ramped up, the small cap has continually seen robust revenues.

During the third quarter ended Sept. 30, 2007 (the latest quarter for which data was available), the Houston, Texas-based company saw revenues rise 20% to $53.2 million from $44.2 million for the same period in 2006, while revenues for the first nine months of 2007 increased 30% to $153.1 million from $117.9 million for the same period in 2006.

For the third quarter, net income shot up 34.5% to $7.22 million, or $0.58 per share, from $5.37, or $0.48 per share, that T-3 Energy recorded in 2006. For the nine months ended Sept. 30, 2007, the company reported net income of $19.96 million, or $1.68 per share, a 46.7% increase over the $13.61 million, or $1.25 per share earned in the first nine months of 2006.  

And those robust top and bottom lines don’t look like they’re materially retarding anytime soon.

Looking ahead, three analysts surveyed by Thomson Financial are projecting revenues to grow at a hefty clip of 42% in fiscal 2008, compared with competitors whose growth expectations are between 10% and 14% for 2008.

The factors behind that seemingly aggressive growth assumption are rooted in the company’s strategy. T-3 has begun to take steps to complement its organic growth by pursuing an acquisition strategy to broaden its markets and product offerings. In October of 2007, T-3 Energy acquired Energy Equipment Corporation and HP&T Products, Inc., which will expand the company’s product offerings for surface and subsea applications. Last month, the company also acquired Pinnacle Wellhead, Inc., expanding its services for wellhead production products. It opened a new wellhead service facility in Grand Junction, Colorado in January.

If there’s a recession in the future, the company should flourish because demand for energy isn’t vanishing anytime soon. A sluggish U.S. economy may cause oil prices to slide marginally, but not enough to materially knock down revenues. Economists from Bear Stearns are forecasting a decline in oil prices, but not lower than $75 per barrel. 

Bottom line: as the market thrashes about and the energy drought lives on, grab a straw and take a sip out of the oasis that is T-3 Energy.

Note: T-3 Energy Services, Inc. (Nasdaq: TTES) is on the “Watch List” of Growth Report, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, T-3 Energy displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Growth Report portfolio at a later date.

The Russell 2000 (NYSE: IWM) is down more than the other major U.S. indices as credit fears spread on Wall Street.

At 10:38 a.m. ET, the small-cap index had shed 6.28 points, or 0.79%, to 791.50. The Dow Jones Industrial Average (INDU) had lost 52.11 points, or 0.38%, to 13,542.99.

Citigroup Inc. (NYSE: C) announced this morning that it expects additional losses up to $11 billion after already suffering $6.5 billion in credit-related losses in the third quarter. The New York-based bank, the largest in the United States, also said that CEO Charles Prince has left. He is to be replaced by Robert Rubin, a former Treasury secretary and economic advisor to President Clinton.

Analysts are estimating that the credit problems will negatively affect Citi’s fourth-quarter results and are expecting to see a loss. The bank said that its write-offs may increase if markets worsen. It has $55 billion of securities backed by subprime mortgages in its pocket.

Investors had been hoping that this summer’s credit problems were in the past, but recent events put the issue on center stage.

In economic news, growth in the U.S. services industry slowed in October, according to the Institute for Supply Management. Its index of non- manufacturing businesses fell to 54 from 54.8 in September, the group said after the start of trading. The decline was expected by economists. A reading over 50 indicates growth.

Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Multi-Fineline Electronix Inc. (MFLX), up 27% on news of a higher fourth-quarter profit.
• BioSphere Medical, Inc. (BSMD), up 20%. A company representative could not be reached for comment.
• Ballard Power Systems Inc. (BLDP), up 15% on news it is reviewing strategic options.

Biggest percentage losers:

• Gevity HR Inc. (GVHR), down 28% on news of a lower third-quarter profit and a disappointing fourth-quarter guidance.
• Orbotech Ltd. (ORBK), down 9% on news of a decline in third-quarter profit.
• T-3 Energy Services Inc. (TTES) down 9%. A company representative could not be reached for comment.

The world’s unquenchable thirst for energy continues to drive exploration companies to search for new sources of oil and natural gas. After hitting paydirt, those companies must be ready to put a cap on it, which is where T-3 Energy Services, Inc. (Nasdaq: TTES) plays an important role.
 
For investors, T-3 Energy has provided something of a gusher, with a one-month return of 34.3%, a three-month return of 21.7% and a 12-month return of 122.5%, according to Thomson Financial’s calculations. The stock hit a 52-week high Wednesday of $46.52, and in a rising stock market there has been little reason for it to fall back. That’s a huge improvement over T-3 Energy’s 52-week low of $18.04, seen on Jan. 30.
 
The driving question that investors are trying to answer is how much upside potential remains for T-3 Energy—can they expect a continuation of that gusher or will profits dry up to a trickle?
 
T-3 Energy was created in 2000 through the combination of Cor-Val and Preferred Industries. But the Houston-based company’s roots in the energy industry are deep, extending back for more than 25 years.
 
T-3 designs, manufactures, repairs and services the equipment used to drill and complete new oil and gas wells in both land-based and offshore operations. In an industry where parts failure is not an option, many of the big exploration and pipeline companies are customers of T-3 Energy; their operations depend on its valves, wellheads and other devices that are engineered to handle intense pressure of 15,000 pounds per square inch and beyond.

T-3 Energy has 18 manufacturing operations spread across North America. The company noted in its 2006 annual report that from April 2003 through March 9, 2007, it had introduced 43 new products as it places an emphasis on new-product development in a push to become a major original equipment manufacturer.