The shares of oilfield service company, Core Laboratories NV (CLB - Analyst Report), soared to a new 52-week high of $150.96 on Monday, Jun 17, 2013, on the back of several positive developments. The closing price of the stock on that day was $149.78, representing an impressive year-to-date return of about 33.5%. The last 52-week high price of the stock was $147.96 on May 21, 2013.
Core Labs has delivered a positive earnings surprise in three of the last four quarters with an average beat of 2.9%. The company also has an impressive long-term expected earnings growth rate of 18.0%.
Core Labs’ diverse portfolio of proprietary products and services positions it to operate successfully in the current environment of low commodity prices and growing maturity in the global hydrocarbon reserve base.
Additionally, the company’s strong presence in the emerging shale plays and its global footprint – including markets in the Middle East, Asia Pacific, and East and West Africa – provide for steady growth rates going forward.
Moreover, Core Labs has laid a lot of emphasis on international crude oil ventures, especially in deepwater regions and unconventional resource plays, which generate high returns. During the near to medium term, the company expects greater pre-salt activities in the Kwanza basin offshore Angola as well as in Iraq and Asia Pacific.
With the development of advanced and superior technologies, Core Labs intends to seize attractive opportunities overseas and boost its growth momentum over the next few quarters.
On the flip side, Core Labs has operations in over 50 countries, with approximately 50% of its total revenue coming from international markets. As such, it is exposed to risks associated with doing business abroad. Such risks include embargoes and/or expropriation of assets, exchange rate risks, terrorism and political/civil sentiment in critical countries like Iran, Iraq, Nigeria and Venezuela.
This accounts for Core Labs’ current Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, investors can look at certain other oilfield services firms that are expected to perform better than Core Labs and are worth considering at the current levels. These include Hornbeck Offshore Services Inc. (HOS - Snapshot Report), Gulfmark Offshore Inc. (GLF - Snapshot Report) and Exterran Holdings Inc. (EXH - Snapshot Report). All these stocks sport a Zacks Rank #1 (Strong Buy).