It may seem intuitive in days of $50-per-barrel oil that outfits such as Carbo Ceramics
When oil prices are so high, it becomes more cost effective for oil companies to get known reserves out of the ground than to go exploring for new ones. That results in the services end of the industry seeing profits flow faster than oil through a rig. It's heady days in the oil services industry for companies such as Carbo Ceramics and Maverick Tube Corp.
Carbo Ceramics primarily supplies Halliburton
As it has been a steady performer, churning out impressive results each quarter, and raising its quarterly dividend 20% this year -- from $0.10 to $0.12 -- the company has gotten noticed. For example, it recently popped up on the Modified Foolish 8 screen -- published each month in our small-cap growth newsletter Hidden Gems. (It has also returned 397% in backtests!)
The company, though, has warned investors not to expect next quarter to have the same slick feel as the results the past year has produced. It is undertaking some major maintenance projects at its existing manufacturing facility in Georgia (it's building a second plant there, but it won't be ready for a while) and it's taking a non-cash, pre-tax charge of $700,000. So while they'll still be operating at full capacity, the profit picture will look as fractured as an oil well.
Even if oil prices ease back some, the services sector is still well-positioned, as the focus will then switch to drilling and exploration. It should keep Carbo Ceramics in the black for a long time to come.
Fool contributor Rich Duprey remembers when a gallon of gas cost the same as a pack of cigarettes. Now a carton is the same as a barrel. He owns shares in Carbo Ceramics but does not own any of the other stocks mentioned in this article.