What happened

November was a bounce-back month for companies that produce frack sand and other materials used to prop open shale wells, with CARBO Ceramics (NYSE:CRR), Fairmount Santrol (NYSE:FMSA), and Smart Sand (NASDAQ:SND) each notching double-digit rebounds last month. Several factors drove these fracking stocks higher, including third-quarter earnings, higher oil prices, and the expectation that market conditions will continue improving. 

So what

CARBO Ceramics led the way, skyrocketing 23.2% last month. There didn't seem to be any specific fuel driving that move, since the company reported earnings in late October and analysts didn't release any new commentary. Instead, CARBO's rally appeared to be driven by a combination of factors. For starters, the company looked like it picked up right where it left off in October: The stock had surged 25% in the month's final days after the company reported a jaw-dropping 148% year-over-year improvement in revenue in the third quarter and said that its financial results should continue heading higher in the fourth quarter. CARBO also benefited from an improvement in market sentiment thanks to higher oil prices, as well as strong third-quarter reports and market commentary from rivals. 

A pile of sand with the sun shining over the top.

Image source: Getty Images.

Fairmount Santrol was one of the other frack-sand players that reported strong third-quarter results, which fueled a 14.7% jump in its stock last month. The company's revenue more than doubled on a 42% improvement in volume, which helped reverse its year-ago loss. Meanwhile, the company offered a bullish outlook, noting that demand should increase in the coming year because shale drillers are using 10% more sand and other proppants on each well and are expected to complete more wells next year. That forecast is one of the reasons why the company recently reopened one of its mines and started construction on a new one that should open next year. 

Smart Sand also reported strong third-quarter results, which helped push its stock up 11.3% last month. The company beat expectations on both the top and bottom lines, thanks to a 23% improvement in volumes from just the prior quarter. Meanwhile, CEO Charles Young noted in the earnings release that "market demand for our high quality, Northern White frac sand remains strong." Because of that, the company is bringing an additional 2.2 million tons of annual production capacity on line early next year to help meet this demand. Despite that bullish outlook, an analyst at Jefferies thinks that the stock has risen too far too fast -- up 70% since August -- leading him to downgrade shares from buy to hold last month.

Now what

Even with November's rally, all three of these fracking stocks are down this year, though CARBO has only declined about 3%, which is modest compared to the more than 50% declines for Fairmount Santrol and Smart Sand. That slump suggests that these three proppant producers could have much more upside in the coming years.

That said, the one stock investors might want to consider more closely is Fairmount Santrol. That's because the company is rumored to be drawing acquisition interest. According to a Bloomberg report in October, Belgium mining giant Sibelco has considered making a bid to merge its U.S. division Unimin with Fairmount, which would increase its market-leading position. Meanwhile, leading frack-sand producer U.S. Silica (NYSE:SLCA) might also be weighing a bid for Fairmount, according to another report. The potential for these two frack-sand heavyweights to get in a bidding war could mean more near-term gains for investors in Fairmount Santrol. Still, a less risky investment in frack-sand mining would be U.S. Silica, since it's one of the top fracking stocks in the country thanks to its dominant position and clear growth prospects. 

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.