Matrix Service (MTRX ) is in a sweet spot: As a contractor that builds and maintains oil-storage tanks, its business with Royal Dutch/Shell, ExxonMobil, and ChevronTexaco is booming. Adding to the allure, says Brian Boyer of First Analysis Securities, is Matrix' purchase for $50 million of privately held Hake Group, a service provider to power plants. He says that with Hake, which posted $175 million in sales and $5.2 million in profits in 2002, Matrix should double revenues in 2004, to $455 million, and boost earnings to $1.35 a share, up from an estimated 90 cents in 2003.

Jim Brilliant of Century Management, which owns shares, says that even before the deal, Matrix was set to gain from new rules requiring oil companies to reduce sulfur in gasoline and diesel fuel. "So the oil majors will spend a lot to comply, starting this year," says Brilliant, who adds that Matrix will be the big beneficiary. First Analysis' Boyer, who owns shares, has raised his rating to overweight from equal weight. First Analysis has done banking for Matrix. Boyer's 12-month target for Matrix, which has spurted to 9 from 6 in July, is 13.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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