During the first three months of 2013, National-Oilwell Varco, Inc. (NYSE:NOV) received $3.04 million worth of new orders skyrocketing its backlog to a record $12.92 billion. Also, recently, it doubled its quarterly dividend to $0.26 a share indicating a yield of 1.5%. At the moment, the stock is trading with a PEG ratio below the norm of one, and only 11 times analysts’ expectations for 2014 earnings. Out of 33 analysts tracked by Wall Street Journal, 22 think that it is worth buying while their average target price suggests at least 20% upside potential.
Making a killing on fracking
Fracking – the drilling technology that, more or less, kick-started the energy revolution – involves shooting vast quantities of water and sand deep underground to smash rock formations and release deposits of oil and gas trapped inside. In the process, toxic chemicals find their way to the surface.
Natural gas may have emerged as a relatively clean energy, but the technology that is being used to get it out of crevices underground has raised environmental concerns. Consequently, companies that aim to help drillers operate more efficiently and mitigate environmental risks are in the spotlight.
One company that does exactly this, is Tetra Tech, Inc. (NASDAQ:TTEK). Tetra Tech, Inc. (NASDAQ:TTEK) provides an array of diverse services worldwide– including engineering, consulting, program management, construction management, as well as technical services – and focuses on solving complex problems associated with water management, the environment, natural resources, infrastructure, and energy.
For the past five years, its revenue has grown at a compounded-average rate of roughly 12% while, for the most recent quarter, the company’s cash from operating activities experienced a whopping 34% year-over-year lift.
Even though, it fell short of analysts’ estimates, during the quarter, Tetra witnessed strong demand for its environmental and water services from U.S. commercial and international clients. Going forward, the company expects its oil and gas businesses to bring in twice as much revenue as they did last year.
The cautionary tale
The shale gas revolution has breathed new life into the U.S. natural gas industry providing investors with exciting opportunities.
However, there is always a cautionary tale to be told when investing is involved. In this case, it’s gas prices. So far this year, natural gas has been one of the best-performing commodities. A pick-up in gas prices is good news for drillers, but, for energy intensive industries like nitrogen-based fertilizers is, obviously, a living nightmare.
So, when looking to cash in on the ongoing energy boom make sure you keep tabs on price moves and overall market trends. For more information on National-Oilwell Varco, Inc. (NYSE:NOV), claim your copy below.
National-Oilwell Varco, Inc. (NYSE:NOV) is perhaps the safest investment in the energy sector due to its industry-dominating market share. This company is poised to profit in a big way; its customers are both increasing the number of new drilling rigs and updating aging fleets of offshore rigs.
The article How To Cash In On The Unfolding Shale Gas Boom originally appeared on Fool.com and is written by Fani Kelesidou.
Fani Kelesidou has no position in any stocks mentioned. The Motley Fool recommends National Oilwell Varco. The Motley Fool owns shares of National Oilwell Varco. Fani is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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