# C&J Energy Services (CJES)



## PMREdmonton (Apr 6, 2009)

This is a Houston-based oil services company that focuses on drilling fracks primarily in oil shale plays in the US with a market cap of about 830M.

They had an IPO in the summer around 35. A good chunk of the shares still sit with the owners of the company.

The fundamentals are very good and this is a growth story with major growth in revenues and earnings over the last year. They also have some of the newest and best oil rigs and can easily switch between oil and gas plays as the market dictates. They have two more rigs coming on line this year and they recently bought a frack liquid company to ensure their supply as well as ensure they don't run out on the jobs they do.

Their current fundamentals are:

PE 6.8
Forwared PE 4
EV/Ebitda 3.6
long term debt: 0
PEG 0.27

Despite these glowing fundamentals the stock has been battered down to 17. It seems to be building support now at this level. The fall appears to be due to shorts with 6M shares currently shorted.

In the long run the fundamentals should win out. Once the tide begins to turn it could start to really take off as the shorts try to cover their positions in a stock with a very small float and a large chunk of it held by insiders.

I bought a chunk last week and will probably buy some more this week. This is a high conviction play for me and I think everything is lining up for a double here. I've thought about selling some puts and using the money generated to buy some call positions for September as that should give time for the stock to run up. If the stock doesn't run up I'll end up with a bunch of these at a $13 cost base with a forward PE of 3.

Has anyone here thought about this play?


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## PMREdmonton (Apr 6, 2009)

For anyone interested it seems to have made a sharp move up today.

There has recently been an article about them on seeking alpha suggesting there is nothing at all wrong with the company's performance - just mr. market acting irrationally again.


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