ENERFLEX LTD., $12.39 - Toronto symbol EFX

ENERFLEX LTD., $12.39 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 77.6 million; Market cap: $961.5 million; Dividend yield: 1.9%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration equipment and power generators.

The company has a strong position in three of the world’s fast-growing markets: U.S. and Canadian shale gas production; Australian natural gas from coal beds; and conventional Middle Eastern natural gas, which is converted to liquefied natural gas (LNG) for shipping. Natural gas prices are at 10-year lows, but companies continue to increase their drilling and production.

In the quarter ended June 30, 2012, Enerflex’s revenue jumped 43.9%, to $354.6 million from $246.5 million a year ago. Strong demand from customers in the southern U.S. and South America pushed sales higher.

Without one-time items, earnings per share rose 56.3%, to $0.25 from $0.16, due to the higher revenue and improved profit margins. Enerflex holds cash of $102.9 million, or $1.33 a share. Its long-term debt of $148.0 million is just 16.2% of its market cap.

The company continues to benefit from rising shale gas and natural gas liquids production in the southern U.S., including the Eagle Ford and Marcellus areas.

As a result, its order backlog continues to grow: In the latest quarter, it added $266.8 million of orders to bring its total backlog to $921.2 million on June 30, 2012. That’s up 27.5% from $722.3 million a year earlier.

Enerflex trades at 14.4 times its forecast 2012 earnings of $0.86 a share. The stock yields 1.9%.

Enerflex is a buy.

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