Between 1841 and 1869, about half a million people flocked to the U.S. West Coast for gold. That number was so significant, the prospectors were given a nickname based on the year the migration peaked — 49ers.#-ad_banner-#

While most of the 49ers didn’t find significant amounts of gold, a handful of them did find fortune. Ironically, the most reliable fortunes weren’t made by panning or digging for gold. Instead, they made their fortunes through the sale of picks, shovels and equipment.

Now, history is repeating itself…

The recent natural gas revolution has opened huge profit opportunities for explorers and investors. But it’s the “pick-and-shovel” suppliers that are making the reliable fortune.

The best product available
CARBO Ceramics (NYSE: CRR) isn’t a household name: It doesn’t make anything the average consumer uses or sees on a daily basis. Within the natural gas world, however, CARBO Ceramics is increasingly regarded as the maker of the best proppant available.

Proppant is a sand-like material used to “prop” open the cracks created by the hydraulic fracturing (or fracking) process. It serves two purposes: It holds the fracture open; and it lets the hydrocarbons being extracted freely flow back through the material, so it can be captured by the well or gas collection device.

The problem is that not all proppants are the same. While sand or similar material works in this role, the inconsistent size and shape of many proppant granules mean the fracking can partially collapse, while limiting the potential flow of gas from the reservoir to the well.

But CARBO Ceramics’ ceramic proppant granules are uniform in size and shape, solving both of those problems. The result is a 20% increase in initial production rates and a 20% increase in total recoverable reserves.

With the United States’ natural gas fields collectively producing as much as 70 billion cubic feet of natural gas daily, a 20% increase in a well’s output is smart business.

Stumbling slightly, but the future looks bright
Last year wasn’t necessarily great for CARBO. Although revenue was up from 2011’s $626 million to $645 million, year-over-year income fell from $130 million to $106 million.

Competition from Chinese proppant makers was one challenge. Another stumbling block — and perhaps the biggest obstacle — was a drastic cut in natural gas prices, forcing some gas explorers to suspend operations altogether: Gas prices fell from as high as $4.87 per thousand cubic feet (mcf) in mid-2011 to a low of $1.99 per mcf by April 2012. At that price, some producers couldn’t mine natural gas profitably, so they didn’t bother.

But natural gas prices are mending now, and at recent $3.50 per mcf, explorers are reopening shuttered prospects. Indeed, after falling for 15 months, the number of natural gas rigs operating in the United States started to grow again in November 2012. Despite more wells coming online (or coming back online), the average analyst outlook for gas prices in 2013 average $3.75 per mcf. That’s more than enough to get and keep explorers in the natural gas game and perhaps spur more demand for CARBO Ceramics’ high-quality proppant.

That said, one of the biggest advantages for new investors is how the analyst community expects so little from CARBO Ceramics this year. The pros say the company is only apt to earn $4.33 per share in 2013, which is a 5.6% slide from 2012’s $4.59 (2014’s projection is way better at $5.59 per share). Revenue is only projected to grow by 3% this year. But it’s important to note that these outlooks are likely based on another weak year for natural gas, which may not happen. Translation: CARBO Ceramics may dole out a few pleasant surprises this year, which can prod a stock higher.

Risks to Consider: Although the long-term horizon looks positive, for a variety of reasons, natural gas prices could remain volatile in the short term. As such, sales and profits could ebb and flow from one quarter to the next, something that might be reflected in the stock price.

Action to Take — > CARBO Ceramics is positioned to not only grow in step with the United States’ natural gas boom, in many ways it’s positioned to lead that charge. In addition, it can look forward to more market share gain in the foreseeable future. Although 2013 is expected to be a weak year for CARBO’s bottom line, this short-term outlook may underestimate the continued growth of the fracking industry, and subsequently underestimate the growth in demand for high-quality proppant. For patient investors, CARBO offers more than a 40% upside possibility during the next couple of years.

P.S. — The abundance of natural gas in the U.S. could lead to a third industrial revolution. One analyst is predicting a stock could rise 1,566%. Another stock has already jumped more than 1,000% and is expected to keep going. To learn more about investing in the natural gas boom, click here.