Monday, May 21, 2012

Carbo Ceramics (CRR) 2012 Review

Carbo Ceramics Inc manufactures and sell ceramic and resin coated sand propellants designed for hydraulic fracturing of oil and natural gas wells. The company has grown profits and dividends 13-14% over the last ten years earning a 15-20% return of equity. This performance should continue because:

(1) because its propellants are needed in oil as well as gas plays, the shift in exploration for liquids should not impact the company’s growth,

(2) its move into spill prevention and containment solutions should accelerate growth as environmental concerns get more attention,

(3) acquisitions.


(1) the recent decline in capital spending from major customers,

(2) a decrease in drilling activities in less productive basins.

CRR is rated A by Value Line, has no debt and its stock yields 1.0%

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2002
CRR 1.0% 10% 13% 10
IND 1.7 8* 13 NA

Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
CRR 0% 26% 2 22% A
IND 23 17 NA 13 NA

*over half of all companies in CRR’s industry do not pay a dividend


Note: CRR stock made great progress off its March 2009 low, quickly surpassing the downtrend off its September 2008 high (red line) and the November 2008 trading high (green line). Long term the stock is in an up trend (straight blue lines). Intermediate term, it is in an down trend (purple line). The wiggly blue lines are Bollinger Bands. The Aggressive Growth Portfolio does not own a position in CRR. The upper boundary of its Buy Value Range is $44; the lower boundary of its Sell Half Range in $138.

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.