Could Heckmann Corporation (HEK) Be in the Energy Sweet Spot? – Chesapeake Energy Corporation (CHK), Anadarko Petroleum Corporation (APC)

Source: SEC filings, revenue figures in millions

Looking at how the company’s revenue has increased over the past three years, you can see why the market is excited. But its also important to note that some of the growth has been fueled by acquisition and heavy investment in capital expenditures. That helps explain why this is the first year that the company has turned a profit as a water services provider.

In the earnings release was this golden nugget from CFO Jay Parkinson: “We have hit an inflection point on capital expenditures – we have invested to build our network, and are now at the point where we can begin to leverage that investment, so our capital expenditures should be much lower going forward.”

In other words, all that money that the company has been spending to build out its infrastructure is finally going to start to pay off. Spending is going to ramp down, and the infrastructure will begin to be used by energy companies.

How to play this
I’ve been a big fan of Heckmann Corporation (NYSE:HEK) for some time now, mostly because of its first-mover advantage in an increasingly important niche. That being said, I’ve only devoted about 2% of my overall portfolio to the company, as it’s still in its more speculative, early stages of growth.

The article Could This Tiny Company Be in the Energy Sweet Spot? originally appeared on and is written by Brian Stoffel.

Fool contributor Brian Stoffel owns shares of Veolia Environnement (NYSE:VE) (ADR) and Heckmann. The Motley Fool recommends Veolia Environnement (ADR). The Motley Fool owns shares of Heckmann and has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, Short Jan 2014 $15 Puts on Chesapeake Energy, Long Jan 2014 $4 Calls on Heckmann, and Short Jan 2014 $3 Puts on Heckmann.

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