Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What?: Shares of Emerge Energy Services (NYSE: EMES) rocketed ahead 13% on the combination of the first shipment from its 2.5 million ton per day Arland dry sand processing plant being delivered, an uptick in oil prices, and an upgrade from analyst group Robert Baird to "outperform" from "neutral."
So What?: The analyst upgrade doesn't really have much of a material impact on the company, so we'll throw that one out as a significant driver for the company. Obviously, if there is any recovery in the price of oil, shareholders are going to rejoice by buying back shares in depressed energy companies like Emerge. After all, a 13% climb looks like chump change compared to the 64% shellacking shares have taken in the past few months.
Then we have the introduction of its new Arland dry sand plant. This is something that has been in the works for quite some time, so it shouldn't come as a surprise to long term holders of the stock. The plant will increase Emerge's sand processing capacity by 56%, and most of its new sales volumes are already contracted out on long-term pricing contracts.
Now What?: There isn't a whole lot that has changed with this company over the past few months since so much of its production volume is sold on those long-term contracts, yet shares of the company have been all over the place. If you are looking for a long-term investment in the shale boom and have the stomach for a really wild ride, this could be a very opportune time to buy.
