Steve-
I've been tracking LUFK's backlog and sales for 3 years. The trends are very positive right now. If you want to see if inventory/material shortages are to blame for a high backlog, you can look at the breakdown of inventory in the SEC filings (i.e. Finished Goods, Work in Progress and Raw Materials).
When backlog is rising, it's a good idea to look at raw material and work in progress. LUFK's backlog is very strong right now, and as long as the price of oil stays above $15, LUFK should have an excellent year (more than $3.00 in EPS).
Local manufacturing means that LUFK has some manufacturing operations in S. America and Canada (otherwise, LUFK would have to transport the pumping units, which would be silly).
Direct competitors in LUFK's pumping unit business are Lagrand and Amscot, as we as many smaller players. LUFK owns nearly 2/3 of the market for its type of pumping units, and according to the company, close to half of the world's oil wells use LUFK pumping units (many of these units will need to be replaced in the next 5 years). LUFK is known for its excellent quality and customer service, as well as the design of many of the pumps. In fact, the typical pumping unit that you may have seen around the country, which may be called a horse head, is either a LUFK design or a copy of the original LUFK designs (or it's a LUFK unit).
Demand for LUFK's pumping units could grow by 20% over the next few years. If demand really picks up, and LUFK raises its prices, the company could really post some tremendous numbers. Consider a 20% increase in unit sales, combined with a 10% price increase. Overall pumping unit sales could increase by more than 30%, driving earnings by more than 50%. If this happens, then LUFK could certainly earn more than $4 in 1999.
Don't worry about institutions finding this stock. When things pick up, the stock will get it's fair attention. The thing I'm looking forward to is the multiple expansion, considering LUFK trades at a large discount to its peers.
Todd |
