ENERFLEX LTD., $13.01 - Toronto symbol EFX

ENERFLEX LTD., $13.01 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 77.7 million; Market cap: $1.0 billion; Dividend yield: 2.2%) 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 expanding 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.

In the quarter ended December 31, 2012, Enerflex’s revenue rose 9.8%, to $421.6 million from $383.8 million a year ago. Earnings per share rose 59.1%, to $0.35 from $0.22, due to the higher revenue and improved profit margins.

Enerflex’s northern U.S. and Canadian customers have slowed their natural gas drilling activity, but strong orders from southern U.S. and international producers has more than offset that shortfall.

The company holds cash of $145.0 million, or $1.87 a share. Its $96.5 million of long-term debt is just 9.5% of its market cap.

The stock trades at 12.8 times Enerflex’s forecast 2013 earnings of $1.02 a share. The company raised its quarterly dividend by 16.7% with the January 2013 payment, to $0.07 from $0.06. The stock now yields 2.2%.

Enerflex is a buy.

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