Bullish Technicals Could Help This Stock Dwarf Recent 50% Gains by johnjordan576


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									Bullish Technicals Could Help This Stock
Dwarf Recent 50% Gains
                                             Global demand for oil is strongly linked with 
                                             economic   performance.   While   2013   U.S. 
                                             economic growth is expected to be anemic, U.S. 
                                             oil  demand is expected to rise in 2013 from a 
                                             15­year  low.  (Source:  “U.S.  Oil   Demand  Seen 
                                             Rising in 2013 From 15­Year Low,” Wall Street  
                                             Journal,   December   11,   2012,   last   accessed 
                                             January 8, 2013.)
                                          And,   thanks   to   oil­rich   shale   formations   and 
fracking,   the   International   Energy   Agency   (IEA)   expects   the   U.S.   to   tie   Saudi 
Arabia as world leaders in oil production by 2017, surpassing Saudi Arabia by 2022.
TETRA Technologies, Inc. (NYSE/TTI) is a diversified oil and gas services company 
that   operates   in   three  divisions:   fluids,   offshore,   and   product   enhancement.   The 
fluids unit aids in drilling activities. The offshore segment decommissions platforms 
and pipelines, and explores for oil and gas. In addition to production testing services 
for   oil   and   gas   operations,   the   product   enhancement   division   also   recycles   oily 
residuals, a byproduct of refining and exploration.
In April 2011, TETRA announced that it had streamlined its operations with the 
sale   of   essentially   all   of   its   subsidiary   Maritech’s   oil   and   gas   properties   for 
approximately $222 million. Divesting itself of Maritech allowed TETRA to reinvest 
in   its   growth­oriented   service   businesses.   (Source:   “TETRA   Technologies,   Inc. 
Announces   Strategic   Transaction,”   TETRA   Technologies,   Inc.,   April   7,  2011,   last 
accessed January 8, 2013.)
As   a   result,   TETRA’s   financial   results   are   adjusted   to   exclude   the   impact   of 
Maritech’s operations.
On November 6, 2012, TETRA announced that consolidated third­quarter revenue 
climbed   16.2%   year­over­year   to   $234   million.   Third­quarter   net   income   from 
continuing operations was $7.7 million, or $0.10 per share, versus $1.4 million, or 
$0.02 per share, for the 2011 third quarter. Total gross profit was $50.9 million in 
the third quarter of 2012, versus $35.7 million in the third quarter of 2011. (Source: 
“TETRA   Technologies,   Inc.   Announces   Third   Quarter   2012   Results,”   TETRA 
Technologies, Inc., November 6, 2012, last accessed January 8, 2013.)
During   the   first   seven   months   of   2012,   TETRA   successfully   completed   three 
acquisitions: Optima Solutions Holdings Limited, Eastern Reservoir Services, and 
Greywolf   Production   Systems.   These   three   acquisitions   have   broadened   the 
company’s well completion and production testing service capabilities, and they have 
significantly   increased   its   geographic   footprint,   both   domestically   and 
During   the   third   quarter,   the   company   drew   down   approximately   $57.0   million 
under  its   $278­million  revolving  credit  facility   to  fund  a  portion   of  the  Greywolf 
acquisition   and   to   cover   general   corporate   expenses.   As   of   the   end   of   the   third 
quarter, it had approximately $221 million of borrowing capacity still available.
Total debt at the end of the third quarter was $353 million, versus $118 million at 
the end of fiscal 2011. A portion of the increase in debt during the third quarter was 
attributed   to   increased   receivable   balances   associated   with   two   major   contracts. 
TETRA expects to receive these outstanding payments during the fourth quarter, 
which should offset the anticipated negative impact on its cash position.

                         Chart courtesy of www.StockCharts.com
From August 2011 to December 2012, the moving average convergence/divergence 
(MACD)   was   trending   higher,   while   the   stock   price   was   trending   lower.   This 
formation   of   bearish   convergence   in   the   MACD   suggests   that   the   long­term 
downtrend in the stock price is weakening, and there may be a reversal of trend in 
Since the beginning of November 2012, the company’s share price has been bullish, 
climbing 52.0%. In early December, TETRA’s share price broke through a two­year 
downtrend, a further bullish sentiment. In addition, it is the first time since August 
2011 that the company’s share price has traded above the 200­day moving average 
(MA). Furthermore, the company’s 50­day MA is closing in on its 200­day MA, which 
is another bullish indicator.
A  financially solid company  with  a  great  outlook,  TETRA  announced  that  third­
quarter revenues were up 16.2% year­over­year to $234 million. Earnings per share 
(EPS)   for   the   quarter   were   up   400%   at   $0.10.   A   streamlined   company   with 
improving operations, TETRA continues to be a great penny stock with excellent 
long­term growth potential.

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