I’m naming energy as the top sector for 2012. Supply disruptions, economic fears, consumer habits all had an impact on the sector in 2011 and will keep doing so in the year ahead. However, the sector is set for explosive growth in the New Year due to a dynamite combination of rising discretionary income and the highest level of consumer confidence in years. For that reason, I highly recommend that you pick up at least a few shares in our energy and energy-related companies.
Approach Resources (NASDAQ:AREX) is a drilling company in the hottest untapped oil and gas market. Energy trapped in sand and shale formations was once too difficult and expensive to extract, but not anymore. Thanks to Approach’s sophisticated technology, total production was up 46%, revenues were up 87% and net income rose 240% in the last quarter. The stock has been on a tremendous run in the last three months, rising 72%. As the company finds more oil and natural gas, I expect these gains to continue.
2012 Estimated Sales Growth: 39.1%
2012 Estimated Earnings Growth: 54.5%
Colfax (NYSE:CFX) is critical when it comes to transporting liquids — particularly for oil and gas companies. After all, what good is your oil if you can’t get it to the refinery? Colfax is the leading expert in pumping and fluid-handling systems, and it has been at the top for over 10 years. The most recent quarter brought a 71% increase in net income, a 28% rise in sales and a whopping 23% earnings surprise. Analysts are going to continue to underestimate this company in 2012, and that’s why you should own the company in the New Year.
2012 Estimated Sales Growth: 7.2%
2012 Estimated Earnings Growth: 19.9%
Complete Production Services (NYSE:CPX) is the perfect stock for a market defined by higher energy prices because it helps oil and gas companies develop reserves, enhance production and reduce costs — all while doing it faster than other companies. Every company is looking for an edge, and that’s why they’re seeking out CPX. Sales growth has been through the roof and will continue to grow in 2012.
2012 Estimated Sales Growth: 25.1 %
2012 Estimated Earnings Growth: 37.7%
Carbo Ceramics (NYSE:CRR) helps boost the output for natural gas and oil wells. It’s complicated, but CRR is a master of reducing spillage and keeping wells from being damaged in the extraction process. Looking ahead, the company expects demand for its product to continue to boom. Carbo Ceramics is so optimistic about future demand that it is commencing production on its newest 250 million-lb. production line at one of its plants in Georgia. And the company is buying back its stock — always a good sign and a boost to shareholder value.
2012 Estimated Sales Growth: 26.4%
2012 Estimated Earnings Growth: 28.9%