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Cactus Inc (NYSE:WHD) is a designer and manufacturer of wellheads, frac trees, manifolds, and production trees that are sold or rented to onshore oil and gas companies. Cactus is also the third wellhead company built by its CEO Scott Bender, which implies it's very well managed and should generate shareholder returns according to Credit Suisse.
The Analyst
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Credit Suisse's James Wicklund initiated coverage of Cactus's stock with an Outperform rating and $31 price target.
The Thesis
Bender sold his first company to Cameron International in 1997 and his second company to GE Oil & Gas in 2011, Wicklund said in a note. His third company, Cactus was created the day his non-compete with GE Oil & Gas ended and became its own publicly traded entity in February.
Bender also managed to hire many of his former senior staff members and opened one manufacturing plant in Louisiana and another in China, the analyst said. Both facilities are "very tightly run and managed" with zero product quality issues so far. In fact, the company can offer both a lower-priced option from China if ordered in advance or an identical product made in the U.S. in a shorter time frame but with a slightly higher cost.
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As such, Cactus is able to compete against its larger competitors as it offers customers the option to save money, Wicklund said. This helped the company boost its market share from 9 percent three years ago to 26 percent today.
For Bender's new company, it's a story of "been there, done that" and shareholders should expect an upside potential of 26 percent from current levels.
Price Action
Shares of Cactus were trading higher by nearly 1.5 at $25.01 percent Monday.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.