Core Laboratories N.V. (CLB)

improved extraction of oil and gas - a long-term need

Best of 09, Smashing.

this sleeping monster will not stay low too long ., strong need for there service in next 4 years,get bullish!

best of 2009

gas horizontal drilling technology

found out about it on caps.

Core Labs has been buying out their competition for several years and with few remaining competitors they are starting to come into their own.

Fact is we are not getting away from oil anytime soon and as oil gets harder to find and extract, the services of CLB will be in high demand.

It is an oil play.

yup

CANSLIM pick. EPS increasing quarter after quarter until this thing reaches 200 - 250. Has never missed on an earnings report also. Be patient and you will be rewarded.

This company is one of 62 listed on the BetterInvesting Growth Screen in January 2008. It met 4 criteria: it is projected by Value Line to double earnings in the next five years, has actually doubled earnings in the past 5 years, is selling at price-earnings multiples (P/E’s) that are 110 percent or less of Value Line’s projected earnings growth rate and has a safety rating of average or better. It was listed in the March 2008 BetterInvesting magazine.

compared to FTI. it looks cheap, there is still strong correlation between them. "value" play.

CLB is nearing an area of resistance. Both its high and low points have increased. Although it may take a couple weeks to clear the resistance, once it does I look for a big greakout.

CoreLabs is on the forefront of oil technology. With oil prices rising, oil companies will need to squeeze everything out of their oil wells to maximize profits and corelabs has the technology that the oil copanies need to to get the job done

One pitch, several picks: Oil services companies with positive stock price momentum, high historical growth rate, high projected 5-year growth rate and low PEGs.

Core Laboratories N.V. provides reservoir management services to the oil and gas industry worldwide. The oil and gas industries are very strong now and their is expectation to increase its value. Moreover, CLB is one of the industries that has very string financial, management, and production. This is one that can promise more in the next few years....

Oil exposure

Core Laboratories is in the business of providing oilfield management services to oil producers globally. Playing the volatility in the price of oil these days can get you burned whether you are a long term or short term investor. The reason I say this is because oil is pegged to the US Dollar and the way our Federal Reserve is dropping interest rates, the dollar will naturally weaken more and more as time passes. This is important because a European producer only pays about $65 for each barrel of oil vs. a USA producer, because he is converting his euro and getting $1.54 worth of value. As interest rates fall those investors outside the USA are not only getting less interest on their money but they are also losing when they convert back to their own currency. It is only logical that they will start repatriating to their own currency and sell dollars. As they sell dollars the USA currency weakens further and thus oil (denominated in dollars) will rise in value. From the above scenario it is not difficult to someday soon see Oil trading at $150 a barrel. With oil currently trading at over $100 a barrel each barrel becomes more and more valuable to the producer. Thus it is in the interest of each producer to maximize the production of each well and to also try not to leave any oil behind when they pump out all the reserves from it.

Core Laboratories is the perfect play for the scenario that I have described above because they are a service company and their job is to come in and manage oil wells and maximize production. Not only do they manage wells but they have special equipment that attempts to squeeze whatever oil is left in the ground from so called closed wells.
The company's services are in great demand as the service they provide is a no brainer for Oil producers. The great thing about Core Laboratories on top of all that I have said above is that it is also an extremely well managed company itself and it is just gushing in free cash flow.

For 2008 the company is expected to earn $6.05 in free cash flow and have a Return on Invested Capital of 37.1%. Because Oil is so high their business is growing at incredible growth rates. For example in 2002 the company had free cash flow numbers of $.27 per share and a ROIC of just 3.3%. So as you can see the company is booming compared to just 6 years ago. Because of the larger revenue per share, its profit over break even is growing larger and larger and its economies of scale are starting to kick in. For those who don't know what economies of scale are it is simply the larger you are the more products you can buy in bulk and thus the lower your cost per unit. Wal Mart is a perfect example of EOS. Because they buy so much from a producer they get preferential prices.

The only downside I see for Core Labs is if Oil were to drop below $60 a barrel, but I personally don't think we will ever see such prices ever again. That would only happen if we have a major global recession and I don't see that happening. My FireRock Research which determines the Main Street Intrinsic Value per share (The FireRock Element) believes that CLB would sell for $187.33 if it were bought out entirely by a private investor. So as you can see we still have a long way to go before the company becomes fully valued. The Psaras Ratio which we used in our last blog entry for ASFI has Core Labs having a Psaras Ratio of .13 which is one of the lowest results that I have ever seen since I created the ratio. The simplified form of the Psaras Ratio again is PE/ROE . So we have 24/180 = .1333. Yes that’s right, your eyes are not deceiving you, CLB's return on equity is 180%.

Another oil and gas company