I know it seems like I’ve been writing primarily about the Motley Fool over the past week or so, but I am but a simple servant to my masters: the wide-ranging, unusually intelligent, and good lookin’ Gumshoe readership. And a large number of you, I’m guessing something on the order of a zillion, have emailed me about this one.

So on we go.

This is from Bill Mann, who co-edits the Motley Fool Hidden Gems newsletter with Tom Gardner. I have a bit of a soft spot for Mann because he’s picked several international stocks that I also really like for Hidden Gems and his Global Gains newsletter (Sadia, HDFC Bank and others), but this is a domestic pick … so let’s see what we’re dealing with.

The essential claim here is that gasoline is going to $5 a gallon, and that this will benefit the “one oil-services company that stands head and shoulders above all the rest.”

“When it comes to finding new oil and gas formations where others have failed or where drilling previously proved unprofitable — these are the GO-TO guys!”

There have been lots of new permits for land drilling in the US over the last couple years as oil prices have exploded, and, according to the Foolies, “That explains why shares of this tiny company shot all the way from $6 past $85 in just the time it took gas prices to double.”

So those are the “hidden millionaires” — the folks who bought this one at $6 … and put in close to $100,000.

We get a few more clues for your reading pleasure:

Company was launched in 1952, and the founder still runs the place and owns something near $6 million worth of the stock (the Hidden Gems folks LOVE companies that are still owned and run by founders).

“For the past three years, revenues have grown at a stunning 55% per-year clip, and I have every reason to believe that this fortune-building growth will continue well into the future … At a recent oil and gas conference, the company’s CEO confirmed that demand for this company’s services are at ‘an all-time high’ and that its crews are already fully booked well into 2008.”

Then the Fool goes on to say that there’s no fear to be had in falling oil prices for this one — they think that the company’s services will still be in demand at $60 per barrel, and they say they “wouldn’t count on” oil falling back to even $90 a barrel.
And they say that this one is “virtually recession-proof.”

Heard that one before?

They do back it up — and I see the logic, there have certainly been folks who estimate that gas consumption is just not that elastic, especially in the U.S. People can’t stop driving 30 miles to work from their suburban enclaves just because the trip costs them half again as much in gas, and the marginal demand from the emerging world, where gas prices are in many places controlled by the government, seems unlikely to slacken much. But that’s a debate each of you can have with himself … preferably in a loud voice, in a public place. Just pretend you’re talking on your cell phone.

There’s even a quote from an energy analyst who expected oil prices to climb “as high as $110 a barrel” — which seemed like a lot, until that number was breached yesterday.
This stock was recommended by the Hidden Gems newsletter back in December of 2005, apparently, for more than a 100% gain so far (those “hidden millionaires” got in well before Bill Mann did) but they think that the recent pullback in the price means it’s a good buy again.

So we’ve got a few more clues to feed into the Cognitationizer …

* “Revenue has been growing at a breathtaking 55% clip over the past three years.
* Net income has tripled over the same period.
* Return on Invested Capital (ROIC) has soared from 8.8% in 2004 to 19.8% last year.
* Top management has been in place for 15 years, and has proven that it puts shareholder interests front and center.
* Its visionary founder has been involved in day-to-day operations for the past 55 years and still owns a sizeable stake.
* Demand for its services are at an all-time high as exploration companies search for desperately needed new oil and gas formations.
* And profits should continue to soar right along with energy prices for many years to come.”

So … what is this company that’s going to help cheer you up when gas hits $5 a gallon at your local station?

Dawson Geophysical (DWSN)

The shares are indeed down about 20% or so from their recent highs, and the shares seem decently priced (forward PE of about 13, if you believe the analysts). I generally agree with the Hidden Gems folks that oil services remains a very attractive investment area, though I haven’t spent much time examining Dawson and I don’t own the shares.

This is still a very small company, market cap of about a half billion dollars.

Oh, and you might be wondering what they do. They are a seismic data company — so they send out crews to collect 2D and 3D seismic data, and they process it for their clients so they can help figure out where the oil and gas is and the best way to drill to get it out of the ground.

The company is focused on just the U.S. onshore business, so they are not as diversified as some of the bigger firms, or the firms who also do offshore seismic data collection. I don’t know much about the competition in this niche, but I can certainly see the logic that a significant upturn in US land drilling, and a need to find the heretofore hidden sources of oil and gas in this country, should mean much more business for Dawson. Some US-focused oil service companies have had disappointing results in the last six months or so, but that’s mostly the drillers — and primarily the US land drillers who were facing a glut of unneeded drilling rigs in some areas.

So, I haven’t dug that deeply here, but I can tell you that this is the stock the Hidden Gems folks are teasing you with … I’ll stipulate that they’re pretty smart guys and have made quite a bit of money for their subscribers on DWSN in the last year or so, but I have no idea whether or not this is a prime time to buy shares again. It is, at least, not expensive.

So … any Dawson holders out there? Experts in seismic data collection? Feel free to enlighten the rest of us.

full disclosure: I do own shares of both Sadia and HDFC Bank, which were briefly mentioned at the top. I may take a further look at Dawson Geophysical in the future, but I don’t own shares of DWSN now and will not trade in the shares of any company mentioned above for at least three days.