The energy industry has gone through a lot of turmoil over the past several years, with dramatic volatility in crude oil prices having a big impact on profitability among major players in the industry. Even the largest companies haven't been immune to the downdrafts that have come when times were tough. Yet when good news comes, it has produced big bounces that are especially noteworthy among the smaller companies in the industry. Matrix Service (MTRX -2.13%), Atwood Oceanics (ATW), and CVR Energy (CVI -4.59%) have all climbed 30% or more just in the past month, and investors want to know whether they have further to run higher.
Here, you'll find more on each of these companies and whether they look like smart picks to buy now.
Matrix Service engineers a nice gain
The energy industry includes not only the companies that are directly responsible for producing oil and natural gas but also the service providers that assist those exploration and production specialists. Matrix Service is an engineering company that provides maintenance, construction, infrastructure, and other services primarily to the energy, natural resources, and electric power industries. The company has benefited in the past from interest in areas such as liquefied natural gas as well as storage facilities and storm restoration services.
Matrix Service has climbed by about half in the past month as the company's fiscal fourth-quarter financial report indicated the possibility of a recovery in its prospects during the coming fiscal year. Challenging conditions have clients spending less on the capital projects that help make Matrix Service profitable. However, investors are increasingly confident that the worst of times for energy are over and that further gains will lift Matrix Service.
Atwood looks ahead
One thing that often happens in industries going through turmoil is that consolidation activity picks up. That's been the case for Atwood Oceanics, which received a buyout bid from Ensco (VAL) about three months ago. The nature of the deal tied Atwood's price to Ensco's, because if the merger goes through, Atwood shareholders will receive Ensco stock in exchange.
Atwood had a tough time early in August, largely because of weakness throughout the drilling industry brought on by poor earnings and hurricane-related concerns. Yet the stock bounced back as investors got more confident that the Ensco deal will go through, and a more favorable outlook for drillers emerged as crude oil prices bounced from their worst levels. Atwood still has a long way to go before it can fully recover from the tough environment, but joining forces with Ensco provides a good opportunity for future growth.
CVR powers up
Finally, CVR Energy posted strong gains over the past month. The company has stakes both in petroleum refining specialist CVR Refining LP and in nitrogen fertilizer company CVR Partners LP. Both sides of the business have done well since mid-August, but the refining business has outperformed its fertilizer counterpart. Having exposure to the fertilizer business adds a different dimension to CVR Energy, but both divisions are tied to the fate of oil and gas prices and energy operations.
CVR Energy has thus far dodged a bullet by having its refinery locations avoid storm-related damage. CVR's two refineries are located in Oklahoma and Kansas, which puts them closer to key oil-producing assets in the region. Tornado activity is a higher risk in these areas than its Gulf counterparts face, but during hurricane season, CVR's locations look highly advantageous and could contribute to outperformance for the unit as long as hurricane-related problems persist in Houston and elsewhere on the Gulf Coast.
Oil stocks have gone through tough times lately, but these three have seen recent success. If the industry continues to see positive momentum with prices and other factors, then CVR Energy, Atwood Oceanics, and Matrix Service could see continued gains in the future.