3 Pick-and-Shovel Plays for Shale: MDU Resources Group Inc (MDU), U.S. Silica Holdings Inc (SLCA), Heckmann Corporation (HEK)

And speaking of fracking fluid…

Sand and other proppants are an integral part of hydraulic fracturing fluid. U.S. Silica Holdings Inc (NYSE:SLCA) supplies silica sand for this purpose. That means shipping the sand by its own rail, truck, or barge assets to all major shale plays in the US.

U.S. Silica Holdings Inc (NYSE:SLCA)’s Industrial and Specialty Products division also supplies a diversity of industries, including glass, housing, and water filtration/ treatment. But the big story for US Silica clearly remains providing sand for hydraulic fracturing.

Founded over 100 years ago, U.S. Silica Holdings Inc (NYSE:SLCA) went public on Feb. 1, 2012. The stock initially dipped, but came back strongly. The stock recently dropped again due to a large sale by a private equity firm. I anticipate another strong comeback.

U.S. Silica Holdings Inc (NYSE:SLCA)’s most recent earnings report showed that 2012 earnings per share increased 146% over 2011 earnings. CEO Bryan Shinn, in a conference call, mentioned that the company has turned away customers due to product shortages, a situation management’s now trying to fix.

The company’s earnings momentum, and the continued demand for fracking sand, suggests sustained profitability and earnings growth for U.S. Silica Holdings Inc (NYSE:SLCA).

Final Foolish Thoughts

If you want a safe all-around “pick and shovel” shale investment, I recommend MDU Resources. Its diverse operations protect its revenues.  If you want a momentum growth stock, US Silica and its high-demand fracking sand and transportation infrastructure is for you.  And if you want a diamond-in-the-rough growth stock, Heckmann Corporation (NYSE:HEK)/Nuverra Environmental Solutions could be the ticket — but not for long. Its most recent earnings report caused the company to pop 11% last Tuesday, suggesting that the market may have already priced in much of its potential.

The article 3 Pick-and-Shovel Plays for Shale originally appeared on Fool.com and is written by Robert Zimmerman.

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