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Strategies & Market Trends : Value Investing

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To: Labrador who wrote (46230)	1/18/2012 4:43:16 PM
From: E_K_S	Read Replies (1) of 78525

Hi Labrador - Re: C&J Energy Services, Inc. Commo (CJES) -NYSE This is one of my current favorites. I am accumulating a position w/ 60% of my buys completed. Just missed completing my buys today at $17.16/share. Hopefully, I will be able to get the rest of my shares at that level or lower. The company really does not have that long a history so their earnings could be suspect when viewed for the long term. My brief review of their financials shows that revenues are exponential, doubling from 2010 to 2011 as they build more fracking rigs to bring into service. They build these Rigs based on 2-3 year customer service agreements so they are pretty much assured of their use because of the terms of their service contracts. I was able to identify their 8 largest customers (those that have entered into these 2-3 year service agreements). They are very large and credible E&P companies that have sound balance sheets and can afford their services. Their next quarterly earnings are to be released 2/15/2011 and analysts show $3.17/share for 2011 and $3.28/share for 2012. Based on these numbers, current BV and their trailing PE, this stock (for me) is undervalued. Their GN calculation shows that $25.00/share is fair value. At the current price of $17.76/share, the stock is 40% undervalued. I have been buying very small lots of shares at prices below $20.00. I expect their earnings to stabilize at current levels and do not expect the exponential growth as we have seen in the past. Even with modest future growth this stock is significantly under valued at current levels (if you believe their financials and/or managements recent forward views). My total position is still small less than 1% of the portfolio but I am still quite excited to see what numbers they actually report in February and if they can continue their growth. EKS

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