4-Star Stocks Poised to Pop: Natural Gas Services

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, natural gas compression equipment specialist Natural Gas Services Group (NYSE: NGS  ) has earned a respected four-star ranking.

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

Natural Gas Services facts

Headquarters (founded)	Midland, Texas (1998)
Market Cap	$216.4 million
Industry	Oil and gas equipment and services
Trailing-12-Month Revenue	$53.9 million
Management	CEO Stephen Taylor (since 2005) CFO G. Larry Lawrence (since 2010)
Return on Equity (average, past 3 years)	8.5%
Cash/Debt	$19.14 million / $2 million
Competitors	Baker Hughes (NYSE: BHI  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 97% of the 479 members who have rated Natural Gas Services believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars dcrednek and Diagoras.

Last year, dcrednek listed several of the company's positives: "Very healthy operating margin, cash reserves exceed total debt. ... Given the strong and rising demand for natural gas, looks like NGS will be a solid bet to outperform a sideways moving market over the next several years."

Currently, Natural Gas Services even sports a cheapish price-to-cash flow of 7.5. That represents a clear discount to much larger energy service plays like Baker Hughes (33.9), Schlumberger (NYSE: SLB  ) (21.6), and Weatherford (NYSE: WFT  ) (14.9).

CAPS All-Star Diagoras expands on the outperform argument:

Right now, the ratio of oil price to natural gas price is at a relative high, and will likely fall given the various advantages of natural gas as a fuel coupled with increased de-hedging of natural gas production starting in 2012. This company, which fundamentally is fairly strong, should benefit from rising natural gas prices.

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