Pumping Profits: Layne Christensen

05/12/2015 8:00 am EST


Nick Hodge

Founder and President, Outsider Club

Our latest featured stock is a Kansas-based water management, construction, and drilling company; of particular interest to us, the firm specializes in finding new underground sources of groundwater, which are becoming increasingly scarce, points out Nick Hodge, editor of Like Minded People

The amount of available groundwater is declining both in terms of quality and quantity. And higher regulatory standards have contributed to an overall decline in production.

It's up to companies like Layne Christensen (LAYN) to find innovative solutions to these problems. It will play a huge role going forward, as we're starting to see more severe droughts in the Western United States and other parts of the world.

Layne Christensen is a certifiable expert in finding and accessing new sources of groundwater; its hydrogeological services business dates back to 1952.

Of course, Layne Christensen doesn't just find water resources; it provides complete water resource development and maintenance services that assure safe, high capacity water supplies for municipalities, utilities, industries, and agriculture.

In addition to high capacity well drilling services, Layne offers a broad range of operations and maintenance services for potable groundwater and surface water systems. Layne treats both water and wastewater, designing and building treatment plants for cities and businesses.

The company's high capacity water purification systems serve municipalities, utilities, and agriculture. Engineered to the specific treatment requirements of each site, Layne utilizes the best available technology to provide safe, environmentally compliant water supplies.

Its wastewater services are in high demand from oil and gas drilling outfits in the United States. And it's leading the charge in repairing much of America's dilapidated infrastructure.

In its most recent earnings statement, Layne Christensen reported a 14% year-over-year increase in revenue, which totaled $194 million. And its water resources backlog rose from $59.8 million to $79.3 million.

In late March, the company received orders totaling $110 million, yet the stock only trades with a market cap of $130 million. This was a $50 stock in 2007 and 2008.

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