ENERFLEX LTD. $17.15 - Toronto symbol EFX

ENERFLEX LTD. $17.15 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 78.3 million; Market cap:
$1.3 billion; Dividend yield: 1.8%) 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; Australian natural gas from coal beds; and conventional Middle Eastern natural gas, most of which gets converted to liquefied natural gas (LNG) for shipping worldwide.

In the quarter ended March 31, 2014, Enerflex’s revenue fell 5.9%, to $332.4 million from $353.3 million a year ago. Demand remains strong, but the year-earlier quarter included especially big contributions from large projects in Oman and Australia.

Earnings per share fell sharply, to $0.05 from $0.20, mostly due to cost overruns on international developments. However, Enerflex has appointed a new head of its international division who will work to prevent similar problems.

Jump in new orders increases backlog

Enerflex booked $237.9 million of orders in the latest quarter, up 25.7% from $189.3 million a year earlier. Its total backlog now stands at $801.9 million, up 32.9% from $603.2 million a year ago.

The company holds cash of $219.2 million, or $2.72 a share, and has low debt. The stock trades at 19.1 times its forecast 2014 earnings of $0.90 a share. But it trades at a more reasonable 13.9 times estimated 2015 earnings of $1.23 a share. The shares yield 1.8%.

Enerflex is still a buy.

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