Matrix Service Company (MTRX) provides infrastructure services to the oil and gas industry, and the stock currently trades at about half of its precrisis price while having the highest backlog in the company’s history and just as much revenue, providing an opportunity to investors, says Greg Roeder, Co-Portfolio Manager at Adirondack Research & Management, Inc.
“[MTRX] is a company with a debt-free balance sheet and $1.50 per share in cash. They are in a space, which we believe has good long-term growth potential. We like this space because there has been a huge amount of spending recently to find oil and gas in North America. When they find these fossil fuels, they’re going to need to move and store them,” Roeder said.
Roeder says MRTX builds and repairs fuel-storage tanks, does refinery work and works on the electrical grid, providing essential services to the oil and gas industry. Roeder also says trends in the integrated oil companies may benefit MTRX as they shed assets and the new buyers look to acquire Matrix Service Company‘s services.
“The trend we find really interesting is that the integrated oil companies have been selling assets. They either are selling their refineries to pure-play refinery companies or they’re selling their gathering and storage assets to master limited partnerships. The companies buying these assets are more focused on improving the performance and quality of the assets, which we believe will bode well for companies like Matrix Service,” Roeder said.
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November 16, 2009