24/7 Wall St. Insights
- Where should investors seeking opportunities in the oil and gas industry be looking now?
- Analysts are particularly optimistic about Tetra Technologies Inc. (NYSE: TTI).
- Also: Discover 2 dividend legends to hold forever.
The Dow Jones U.S. Oil & Gas Index shows that the oil stocks were going strong early in the year. But as summer approached, the index began to drift lower again. OPEC+ said in June that it would extend production cuts into next year. The U.S. Energy Information Administration sees oil demand and prices crude rising for the rest of this year, despite the latter pulling back lately. So where should investors seeking opportunities in the industry be looking now?
Let’s take a look at some oil and gas stocks for which analysts have big expectations for the rest of the year and into the next.
| Stock | Mean Target | Upside |
| Civitas Resources Inc. (NYSE: CIVI | CIVI Price Prediction) | $90.21 | 41.9% |
| Clean Energy Fuels Corp. (NASDAQ: CLNE) | $7.13 | 113.8% |
| Crescent Energy Co. (NYSE: CRGY) | $17.33 | 53.2% |
| Kosmos Energy Ltd. (NYSE: KOS) | $8.05 | 65.6% |
| NextDecade Corp. (NASDAQ: NEXT) | $10.67 | 122.3% |
| Patterson-UTI Energy Inc. (NASDAQ: PTEN) | $13.63 | 53.0% |
| Talos Energy Inc. (NYSE: TALO) | $18.06 | 53.8% |
| Tetra Technologies Inc. (NYSE: TTI) | $7.42 | 140.1% |
| Valaris Ltd. (NYSE: VAL) | $96.00 | 50.9% |
So, as far as Wall Street is concerned, Tetra Technologies has the greatest potential upside in the coming year of these oil and gas stocks. Does that mean that its shares are undervalued? Or perhaps one overzealous analyst has skewed the mean?
Why Invest in Tetra Technologies?
Are Tetra Technologies shares poised for a turnaround?
Tetra Technologies stock is up almost 16% from its 1990 initial public offering (IPO) share price and shares were last seen trading for over $3 apiece. However, the share price was around $32 (split-adjusted) in 2006.
The company provides services not only to the energy industry but to industrial chemicals and lithium production as well. It says it is committed to sustainability by caring for the environment, promoting the well-being of its workforce, ensuring the quality and integrity of its work, and contributing to the enrichment of communities its impacts. Its services and solutions enable its customers to operate more efficiently, produce more effectively, and expand into emerging energy and industrial markets.
The company does not offer a dividend, and the stock has been in retreat for much of the past year. Are shares poised for a turnaround? What does Wall Street expect? Let’s have a look.
Tetra Technologies, the Company
This Texas-based energy services company is more than 40 years old.
The company and its subsidiaries operate as an energy services and solutions company through two segments.
The Completion Fluids & Products segment manufactures and markets clear brine fluids, additives, and associated products and services to the oil and gas industry. Its products are used in well drilling, completion, and workover operations in the United States, Latin America, Europe, Asia, and elsewhere. The segment also markets liquid and dry calcium chloride products, as well as ultra-pure zinc bromide to battery technology companies.
The Water & Flowback Services segment provides water management services for onshore oil and gas operators. Its offerings include frac flowback, production well testing, and other associated services in the oil and gas producing regions mentioned above.
Tetra Technologies headquarters are in The Woodlands, Texas. The company was incorporated in 1981 and went public in spring of 1990. Competitors include Newpark Resources Inc. (NYSE: NR), Oil States International Inc. (NYSE: OIS), and TechnipFMC PLC (NYSE: FTI).
In July, the company posted second-quarter results that fell short of expectations on the top and bottom lines. It reported mixed results for the first quarter as well. More recently, it released positive results of a feasibility study related to its bromine assets in Arkansas. It also announced a three-well deal in the Gulf of Mexico.
Tetra Technologies, the Stock
Is Tetra Technologies stock about to soar?
The share price recently sank to a 52-week low of $3.01 and is more than 20% lower than six months ago. The Dow Jones industrial average is up almost 5% in that time. Note that the $7.42 consensus price target would be a multiyear high. The consensus recommendation remains to buy shares. Benchmark reiterated its Buy rating back in May, when shares were changing hands for almost $4 apiece.
Institutional investors hold about 72% of the shares. BlackRock, Vanguard, and Neuberger Berman have notable stakes. About 3 million shares, or more than 2% of the float, are held short. Note that the options on Tetra Technologies have been active lately as well.
Wall Street expectations for where the stock goes in the next 52 weeks vary but are all positive. The higher targets see the share price well more than doubling, and even the lowest target signals plenty of room to run.
| Low target | $6.00 | 94.2% |
| Mean target | $7.42 | 140.1% |
| High target | $8.50 | 175.1% |
Tetra Technologies will have to keep a handle on its debt without diluting shareholders and to boost its profit margins to keep Wall Street happy. The options trading bears watching as well.
OPEC recently lowered its global oil demand forecast, yet the EIA still predicts that global oil demand will increase this year.
However, analysts are optimistic about Tetra Technologies stock for now, at least in the short term.
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