I liked Basic Energy Services (BAS)
back in October, but even I didn't think the shares were going to snap
back this strongly. Competition remains fierce in basins like the
Permian and activity levels weren't great in the fourth quarter, but
Basic Energy has done a good job of controlling costs while adding
assets in its fluid services business.
It looks as though energy
companies are getting an early start to their 2014 capex plans, and
pricing is improving as a result. Valuation for small service companies
is frustratingly imprecise, but I wouldn't rule out the possibility of
EBITDA estimates moving up throughout the year. For now, though, I think
some of the excitement in the shares can be explained a reaction to
some very loudly bearish analysts and a large short position, and I'd
probably wait for the dust to settle a bit before buying.
Follow this link:
Basic Energy Blowing Up
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