Oil services are hot
Schlumberger Limited (SLB) is a global technology services company consisting of two business segments, Schlumberger Oilfield Services and Schlumberger Sema. Schlumberger Oilfield Services is the leading provider of exploration and production services, solutions and technology to the international petroleum industry. Schlumberger Sema is a leading information technology services company providing a unique combination of domain expertise and global capabilities delivered on a local basis.
One of the nice things about an oil services company is that they are less effected by oil prices or oil profits. The lead time for their projects are longer and micro events have less impact on them.
This company, though hurt by the Gulf slowdown has major operations in Russia and on land US plus major growth markets in Brasil and Iraq. They are the world wide leader in their sector.
The recent price momentum cannot be ignored and the covering of short interest is a very good sign. On 8/13 short interest was over 58 million shares and in the recent 9/15 reporting period had dropped to only 17 million shares. The stock has gone higher in 10 of the recent 20 trading session including an increase of 13.21% in the last month. Barchart has a 100% overall technical buy signal and the stock traded recently around 61.61 which is above its 50 day moving average. The stock is consistently trading above its 20, 50 and 100 day moving averages and has a 14 day Relative Strength Index of 91.37%.
Wall Street brokerages consider SLB as a core holding and have 11 strong buy, 20 buy, 4 hold and no negative reports published. They look for double digit increases in sales and earnings. A sales increase this year of 17.80% and next year of 37.30% is predicted. Earnings are expected to increase 35.00% this year and continue at an annual rate of 15.97% for at least 5 years.
The general investor sentiment as measured on Motley Fool is wide and positive. The CAPS members vote 2.699 to 75 that the stock will beat the market with the All Stars voting 724 to 15 for the same price direction. Wall Street columnists have been positive in their articles 24 to 1.
I like this stock because:
1 - Short interests have recently declined
2 - Wall Street is very positive and is pushing this stock as a core holding for all their clients
3 - There is a wide and positive general investor sentiment
4 - Most of all, the recent price momentum is positive and very consistent
Jim Van Meerten is an advisor to Marketocracy Capital Management who uses his model portfolios not only to manage their mutual funds but also their clients Separately Managed Accounts. You can read his blogs about those model portfolios and investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.
Disclosure: Jim Van Meerten through Marketocracy Capital Management has an interest in the stocks mentioned in this blog.