5-Star Stocks Poised to Pop: Lufkin Industries

By Brian D. Pacampara
February 25, 2009 | Comments (1)

Recs

6

Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, oil and gas equipment provider Lufkin Industries (Nasdaq: LUFK) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Lufkin's business, and see what CAPS investors are saying about the stock right now.

Lufkin facts

Headquarters (founded)

Lufkin, Texas (1902)

Market Cap

$506.7 million

Industry

Oil and Gas Equipment and Services

TTM Revenue

$741.2 million

Management

CEO John Glick (since 2008)

CFO Christopher Boone (since 2008)

Return on Equity (average, last three years)

22.5%

Dividend Yield

2.9%

Competitors

Weatherford International (NYSE: WFT)

Wabash National (NYSE: WNC)

CAPS members bullish on LUFK also bullish on:

Chesapeake Energy (NYSE: CHK)

Vale (NYSE: RIO)

CAPS members bearish on LUFK also bearish on:

Terra Industries (NYSE: TRA)

Google (Nasdaq: GOOG)

Sources: Capital IQ (a division of Standard & Poor's), and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 639 of the 655 members who have rated Lufkin -- or 98% -- believe the stock will outperform the S&P 500 going forward. These bulls include SkinInvest and TSIF.

Last month, SkinInvest tapped Lufkin as an oily turnaround play: "Another example of a company selling for a rock-bottom price. Oil prices will rise again and when they do, [Lufkin's] sales will go through the roof."

In a pitch from two weeks ago, TSIF shares that contrarian attitude:

The Power Transmission and Highway trailers are Obama plays and the oil field pumping units, (which they transport and refurbish), will not go completely out of "style". Possbily because of its tie to oil Lufkin is sporting some darn good P/E, and is trading near a 3 year low. Granted it appreciated at an unreal rate in 2008 with oil prices and got well out of it's real trading range, but it should have good support even with low oil in the high $40 range in even a weak economy. … NO debt, some cash on hand. If they can keep things under control for a few more quarters their plus 10% margins and 20% ROE should hold them in good shape.

What do you think about Lufkin, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Chesapeake is a Motley Fool Inside Value pick. Google is a selection of Rule Breakers. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

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  • Report this Comment On March 02, 2009, at 10:36 PM, FooleyUNC wrote:

    Someone needs to do a bit of homework re:Lufkin(from Lufkin website):

    NEWS RELEASE

    FOR IMMEDIATE RELEASE Contact: P. G. Perez

    Corporate Secretary

    (936) 637-5267

    LUFKIN ANNOUNCES BOARD AUTHORIZATION TO

    SUSPEND PARTICIPATION IN COMMERCIAL TRAILER MARKETS

    Lufkin, Texas (Jan. 14, 2008) ─ Lufkin Industries, Inc. (NASDAQ: LUFK) today announced that effective today, the Board of Directors has authorized the Company to suspend its participation in the commercial trailer markets it serves and to develop a plan to run-out existing inventories, fulfill current contractual obligations and to close all trailer facilities.

    Lufkin Industries, Inc. sells and services oil field pumping units, foundry castings, power transmission products and highway trailers throughout the world. The Company has vertically integrated all vital technologies required to design, manufacture and market its products.

    NEWS RELEASE

    FOR IMMEDIATE RELEASE Contact: Christopher L. Boone

    Chief Financial Officer

    (936) 631-2749

    LUFKIN INDUSTRIES REPORTS 26.8% GROWTH IN SECOND QUARTER 2008 EARNINGS FROM CONTINUING OPERATIONS TO $1.42 PER DILUTED SHARE

    Raises 2008 Guidance for Earnings from Continuing Operations to Range of

    $5.50 to $5.70 per Diluted Share

    LUFKIN, Texas -- (July 16, 2008) -- Lufkin Industries, Inc. (NASDAQ: LUFK) today announced financial results for the second quarter ended June 30, 2008. Sales increased 30.6% to $174.5 million from $133.6 million for the second quarter of 2008. Earnings from continuing operations were $21.2 million for the second quarter of 2008, up 24.0% from $17.1 million for the second quarter of 2007. Earnings from continuing operations per diluted share increased 26.8% to $1.42 for the second quarter of 2008 from $1.12 for the second quarter last year. Results for the second quarter of 2008 included the impact of unexpected noncash expense related to oil field and power transmission LIFO inventory valuation of $0.14 per diluted share, somewhat offset by a $0.06 per diluted share benefit from a favorable resolution of an IRS tax audit. Lufkin successfully completed the closure of its trailer business and is now treating it as a discontinued operation.

    For the first six months of 2008, sales rose 17.5% to $315.6 million from $268.6 million. ...........

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