Two years ago, it was tough to find a stock that had a "story" as good as Nuverra Environmental Solutions(NYSE:NES). The company was focusing on two areas that -- on the surface -- were good for both business and the environment.

With the onset of the fracking boom in North America, many were concerned about the waste and contamination of millions of gallons of water the process incurred. Enter Nuverra -- founded by serial entrepreneur Richard Heckmann -- which promised to be a one-stop-shop for fracking companies to meet their water needs.

And not only would Nuverra provide the water, it would do so using pipelines that cut out the need for gas-guzzling trucks to transport it and recycle and repurpose the water once it had been used to frack. It was a win-win.

Or at least, that's what I thought. But since the beginning of 2012, the company's stock is down more than 75%. Obviously, the "story" didn't match the reality, and I'm forced to ask myself: is it time to sell Nuverra Environmental?


Source: Nuverra Environmental Solutions. 

Every year, around springtime, I take time out to go over all of my family's stock holdings, to see if we're comfortable with what's in our portfolio. I find that this once-per-year regime is enough to keep me on top of our stocks, without it being so often that I'm distracted from the really important things in life.

Today, I'm evaluating two reasons to consider selling Nuverra and how I feel about those reasons.

The company has a history of poor execution
Like I said, Nuverra had a lot of good will going for it, as a stock, two years ago. Since then, revenue has increased impressively. And yet, at the same time, the company's profitability and balance sheet have only deteriorated.

NES Revenue (TTM) Chart

NES Revenue (TTM) data by YCharts.

Indeed, between 2011 and 2013, revenue grew by an astounding 90% per year, but EPS fell from $0.32 to a loss of $9.33. Clearly, something's amiss, and a lot of it has to do with the fact that Nuverra significantly overpaid for Thermo Fluids, which didn't create anywhere near the value many had expected and was sold recently to VeroLube for a $70 million loss.

The company has also simply spread itself too thinly over the past two years --building up services in shale regions where it believed it would get a lot of business, only to see things not pan out as planned.

My take: These are serious issues.
Think about it, you've got 90% more business each year, and your losses only multiply. There's clearly something amiss with this business strategy.

And though I can point to misreading the fracking market as well as the botched Thermo Fluids purchase as reasons, I also have to acknowledge that I'm no expert in the fracking field either, and I may have traveled too far out of my circle of competence with this purchase.

The long-term trends are not on Nuverra's side
Fracking has actually been around for decades, but its current form is entirely new to the energy scene. It makes sense, then, that the technology being used to extract oil and natural gas has been evolving rapidly. Just two years ago, tons of water was being wasted in fracking. Today, just about every oil service company is working on reducing the need for so much water.

With that being the long-term trend, the need for such water services could dissipate markedly over the coming years and decades, which would render Nuverra's services unnecessary.

My take: It's tough for me to get a feel for how this will play out.
Nuverra's most important partnership moving forward is with Halliburton (NYSE:HAL). The two companies are working on a water-recycling program dubbed H20 Forward Service. Being conducted right now in the Bakken Shale region, if the program is successful, Nuverra could benefit from Halliburton's size and scope with future contracts in other shale areas.

My main problem is, again, that this simply isn't my area of expertise. As someone who's not an engineer working on or following the technology that could lead to less and less water being used in fracking, I simply don't have the insight that leads me to believe Nuverra has a business that will continually draw in customers.

That being said, I simply think it's time for me to part with my shares of Nuverra.

A surer way to benefit from our natural gas energy boom
There's no question there will be financial winners from the country's huge natural gas reserves. But it can be really difficult for the average investor to know who those winners will be. I no longer think Nuverra will be one, but there are lots of other possibilities.

For this reason, The Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Brian Stoffel owns shares of Nuverra Environmental Solutions. The Motley Fool recommends Halliburton and owns shares of Nuverra Environmental Solutions. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.