There are two ways that you can look at the performance of Core Laboratories (NYSE:CLB) in 2014. The first view is that it saw a massive 36% drop that killed many investors' returns.

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The second way to look at this, though, is that shares of this company are selling at an epic discount. Let's look at the factors that sent Core Labs' shares off a cliff and why those investors with a contrarian attitude should seriously consider adding Core to their portfolios now.

2014: At the mercy of others' spending habits
For all the advantages that Core Labs has as an oil and gas services company, the one disadvantage the company has is that a large part of its revenue is generated from a small handful of big-spending oil and gas producers, such as the integrated majors and national oil companies. So when many of these companies announced that they would be scaling back capital expenditures to focus on free cash flow, it would inevitably flow into the results of Core Labs. 

One of the biggest reasons Core started to tumble -- those two huge share-price declines in April/May -- was that the company announced that spending from some of its clients was going to be less than expected and management revised its guidance down. After that, the price of oil started to weigh heavily on the company's shares. Although you could argue it shouldn't have, since the company's third quarter posted records for profit margins, total net income, and earnings per share. 

With oil below $65 by the end of the year, it makes many deepwater and unconventional formations uneconomical. These two areas are a very large source of revenue for the company, but they are both sources of oil and gas that are at risk of being shelved for later until prices recover. With several large oil producers such as ConocoPhillips and Continental Resources -- both Core clients -- announcing big cuts in capital expenditures for 2015 in response to oil prices, it's pretty safe to assume that certain parts of Core's business will be affected.

Beyond 2015: A major buying opportunity
Anyone who has spent any time looking at oil and gas investments knows that they all wax and wane with the price of oil. And no matter what anyone says about cheap oil being "the new normal," there will continue to be times of over- and underinvestment that lead to gluts and shortages. Knowing this about the recent price plunge in oil helps to give another perspective about shares of Core Labs: They are wildly undervalued. 

Core Laboratories Valuation
Current Value
10-year Median Value

Total Enterprise Value/EBITDA

12.83 times 16.55 times
Price/ Normalized Earnings  21.95 times 33.77 times
Market Capitalization/Levered Free Cash Flow 21.25 times 30.44 times

Source: S&P Capital IQ.

The last time shares of Core were valued this low was during the major market crash following the financial crisis of 2008, and since that time the company has been able to expand net income margins from 13% to 24%. 

So, sure, anyone who is looking to buy shares today should be ready to take a little pain while we work through this oil-price plunge and Core's clients keep capital spending in check. Beyond this time, though, Core has the balance sheet to weather the storm, and its propensity to generate returns will pay off in the future.

What a Fool believes
Core Labs today is the perfect example of the dichotomy of investing. 2014 was incredibly rough for the company and the prospect of low oil prices makes it look like a pretty unappealing stock. But if you have a nose for the long-term trends in energy, Core Labs looks like a steal at today's prices, and those looking to be bold can use time to build a position in a top-flight energy-services company.