General Electric Company (GE), Lufkin Industries, Inc. (LUFK): How To Find Value In This Market

In FY2012, Flotek reported solid financial results, with increases in revenues and operating income of 20.9% and 19.9%, respectively, versus the prior year. Its sales growth was led by a double-digit volume gain in its chemicals segment, as well as higher sales of drilling products and rentals of production equipment. Flotek has been a big beneficiary of the increase in drilling activities in oil-rich shale formations, areas that require the use of innovative chemical compounds to extract oil efficiently.

Looking ahead, Flotek is cautiously optimistic about a continuation of growth trends, assuming oil prices maintain their position above $90 per barrel. A reduction of the U.S.’s reliance on foreign oil imports requires the development of shale rock formations around the country, areas where traditional drilling methods don’t work as well. While opposition to the heavy use of chemicals in oil drilling is gathering stream, the benefits to the population at large are likely to win in the final analysis. As such, Flotek appears primed for strong growth in the future with its innovative, efficiency-enabling technology.

Until alternative energy production becomes cost competitive, oil drilling will continue to increase and companies will need products that improve their oil recovery efforts. While investors could own General Electric Company (NYSE:GE) for its strong position in energy, they would also get possible downside exposure to a variety of other sectors. A better strategy is Flotek, which is singularly tied to oil drilling activity and could be a possible acquisition candidate for a diversified oilfield services company.

The article Finding Value in Artificial Lifting originally appeared on Fool.com.

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