The shale fields mean great opportunities for domestic exploration and production firms and their investors...if you know where to look, observes Stephen Leeb of The Complete Investor.

Advances in technology—most notably the combination of hydraulic fracturing (fracking) and horizontal drilling—have unlocked vast amounts of natural gas from shale deposits around the US

This situation will prove to be a boon for years to come for Chart Industries (GTLS), an Ohio-based company with a $2.1 billion market cap. The company is a leading manufacturer of heat transfer and cryogenic (very low-temperature) equipment and systems that, among their many applications, are used in the production, storage, and end use of hydrocarbons and industrial gases.

High gasoline and diesel prices are speeding the adoption of compressed and liquid natural gas as a transportation fuel. Because of infrastructure requirements, natural gas has been used mostly in fleet vehicles up to now. But it’s starting to expand to the general consumer market as well, and is now available in more than 500 filling stations around the country.

There’s also a strong push underway to export America’s abundant natural gas, which requires transforming it into liquefied natural gas (LNG). Several LNG export facilities have been approved and/or are under construction in the US, and more such facilities are likely to follow.

Recently, a bipartisan group of 44 members of the US House of Representatives called on the Department of Energy to speed up approvals for natural gas exports. The Energy Department is currently weighing a number of proposals to export LNG to countries that lack free trade agreements with the US, trying to assess the impact such exports would have on domestic natural gas prices. We expect the government ultimately will come out in favor of the exports.

Chart Industries stands to be one of the biggest beneficiaries of these developments, and indeed of the growth of the natural gas market worldwide. Its cryogenic products are used throughout the liquid gas supply chain.

Chart’s energy and chemicals division, which accounts for around 25% of revenue, is a technology leader providing heat exchangers and cold boxes essential for the LNG, petrochemicals, natural gas processing, and industrial gas markets.

In addition, its biomedical division sells products for home health care, hospitals, long-term care facilities, biomedical and pharmaceutical research, and animal breeding. While this segment is a relatively modest part of the company’s business compared with the energy area, there’s ample room for expansion.

At a time when many industrial companies are struggling, Chart is generating record sales and earnings. With a $648 million backlog of orders, the company’s sales should approach the $1 billion mark this year.

Chart’s stock looks a tad pricey, trading at 18 times projected 2013 earnings. But with its profits likely to top $5 a share by 2014 and increase at a 20%-plus annual clip in the next several years, we think the valuation is reasonable.

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