With oil and natural gas producers adding active rigs, the demand for sand is growing. And that’s where this producer of monocrystalline sand comes in. Zacks rates the stock a ‘Strong Buy’.
Hi-Crush Partners LP (HCLP)
From Crisis & Opportunity
Hi-Crush Partners (HCLP) is back on the bull. The short-term down trend has been broken and the stock is moving back up.
The company is running at capacity. Frackers are using more sand than ever. Credit Suisse predicts a 50% increase on 2015 demand and is eyeing 62.8 million tons of frac sand demand in 2018. In 2017, it is expected to be 49.4 million tons.
The company said that sand demand was increasing and that it effectively sold out the first quarter. This should lead to increased pricing and margins. Hi-Crush currently has two crews operating in the Permian Basin, both of which are expected to be fully utilized through the end of 2017.
HCLP mines and sells frack sand for use in fracking oil and gas wells. Due to new techniques called monster fracking, the amount of sand used per well has more than doubled over the past few years.
2017 demand is expected to come in at 48 million tons due to a 30% increase in completions and 10-20 percent growth in intensity. 2018 demand is expected to reach 65 million tons.
At the same time HCLP’s share price is coming off multi-year lows.
Put your price target at $29. Our stop-loss is at $13.50.
Christian DeHaemer, Crisis and Opportunity, www.angelpub.com, 877-303-4529, March 31, 2017