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Lufkin Industries was founded in 1902 and is located in Lufkin,Texas. LUFK is a company that had operated in three divisions:Oil Field,Power Transmission,and Trailer Divisions. LUFK is closing their least profitable segment:Trailer Division. LUFK reported .05 cents per share positive earnings from the closeout of their Trailer Devision.
The Oil Field Division manufactures and maintains attifical reciprocating rod lift equitment,they
maintain and repair pumping units,and this division also installs and maintains computer systems to control pumping and analytical services for pumps,and they also have a foundry to make the castings for these pumps.
The Power Transmission Division designs,manufactures,and services speed increasing and speed decreasing gear boxes fot the oil industry. LUFK offers field repair services for their own products as well as their competitors equitment.
The Trailer division made dry-box,flatbed,and dump trailers These trailers were marketed mainly in North America and many of these trailers are on the road today.
Since Lufkin has eliminated their trailer division they now must rely solely on the petroleum industry to make it henceforth. I think the oil industry has commited a grave error here. Or let me say the oil industry or speculators are making a grave mistake. Oil usage or gasoline usage in the U.S. has been declining for many months. I just read today the scapegoat for the oil companys or speculators,China,imports of oil dropped 4% in March,2008. Maylasia,Singapore,and some of the other Asian countrys have stopped the subsidies they were paying for high priced oil products and I think this will have a great impact on future oil prices. Congress looked into my target the oil speculators and found they were having some impact on oil prices. When it was announced that Congress was looking inti this prices dropped several dollars a barrel and the day they said oil speculators were not breaking the law,oil prices shot back up. If you look at Ford and GM they finally have decided to make more efficient vehicles. And this isnt going to die like past events where as soon as gas prices drop everyone goes back to the same bad habits. This year we will have several solar companys doing over $1 billion dollars in sales and I look for them to gain more momentum. T.Boone Pickins,an oil man,is investing a huge amount of capital in a wind farm in Texas. And it won't be the government leading us out of this mess,it will be private investors lookin past the tip of their noses and seeing what has to happen.
LUFK is looking for even greater things in 2008. The power transmission segment has a current backlog of over $234 million for oilfield products. LUFK currently has almost no debt and about $7 dollars per share in cash. LUFK has raised guidance for 2008 with projected earnings in the $5.10 to $5.30 range per share. LUFK recently increased their dividend from .20 to .25 cents which amounts to over 1% per year. LUFK has a lot of things going their way,but let me ask you one question. If oil drops to between $90-$100 dollars will LUFK look so bright. I think oils ligitimate price today should be around $100 and with the backlash oil companys are stirring up,oil may go lower than that in the near future. It is such a shame this country has fallen so far that some illiterate clown can breakwind on the other side of the planet and oil jumps $5 or $10 dollars a barrel.
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Comments (2)
I think equipment orders still hold up well around $100. When most of these equipment orders were placed and earnings forecasts were made, oil probably wasn't much over $100.
Posted by Russell Krull | June 16, 2008 6:34 PM
Hey Russell, Even if Im right that oil is due a large pullback Lufkin would still be all right for a quarter or two. Watch oil prices tomorrow as options expire. See how oil reacts. Also,did you watch oil prices. The Saudis had said they were raising production and oil shot up to almost $140. Then turned around and dropped back and at 6:54 CST down to $133 and change. So today there was a $7 dollar swing. I think oil will drop a few dollars tomorrow while options are expiring. It may take a more severe pullback than $100 to hurt them much,but I think oil may drop lower. Time will tell. Today I really like Lufkin,down the road I dont know. Don
Posted by shorty4407 | June 16, 2008 7:59 PM