Please ensure Javascript is enabled for purposes of website accessibility

Why Lufkin Shares Skyrocketed

By Brian D. Pacampara, CFA - Apr 8, 2013 at 11:53AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is this meaningful? Or just another movement?

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 Lufkin Industries (NASDAQ: LUFK) soared 38% today after industrial behemoth General Electric (GE 3.60%) agreed to acquire the oil-field pump maker for $3.1 billion.

So what: The all-cash deal values Lufkin at $88.50 per share and represents a premium of about 38% to its closing price on Friday. GE is making the move to capitalize on the booming business of extracting oil and natural gas from shale rock, giving the shares of Lufkin peers like Weatherford International and Dover a small bump today as well.

Now what: The transaction, which was unanimously recommended by Lufkin's board of directors, is expected to close in the second half of 2013. "Lufkin's world-class people, equipment and services fit perfectly in our portfolio and will enable us to offer a wide range of artificial lift solutions to our customers in this fast-growing artificial lift sector," GE Oil & Gas CEO Daniel Heintzelman said. So while Lufkin is likely all popped out at this point, GE's rapidly increasing presence in the oil-field services business might be worth buying into.

Interested in more info Lufkin? Add it to your watchlist.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Electric Company Stock Quote
General Electric Company
$77.22 (3.60%) $2.69
Dover Corporation Stock Quote
Dover Corporation
$133.31 (2.74%) $3.55

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.