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HistoricalPEGuy (67.46)

Oil Services, Baby!



January 13, 2007 – Comments (1)

Holy cow. I can't believe how cheap this entire sector is. There are some posers out there, so pick carefully.

Sure, Oil is on the down trend and certain companies are reaping the benefits. The airlines look great right now. They finally got their due!

Do you really believe that oil can go much lower? OPEC is committed to keeping the price up and cutting production. Is big oil poised to stop spending money on rigs and services? No freaking way. Stay focused on the true winners here. Take GSF. 31 analysts are predicting over 90% growth next year. Are you kidding me at 15 P/E? Let's say it grows at 1/4 that rate, 22%. That's still good growth! It makes no sense - short term traders are ruling the market and its time to take advantage of the arbitrage. My picks: RES, HP, GSF, and HERO. Dollar average XES or OIH (I like XES as its not so exposed to the mega-players). ETFs don't go bankrupt, so its not really that hard to find the bottom.

I hope it doesn't happen, but I can totally see an oil pipeline in IRAQ being sabotaged, cutting off a huge supply of oil. Russia isn't afraid to turn the spigot off. China and India are growing so fast their need for oil is unstoppable -- and these stocks are trading this low? Short term thinking. A big misconception is that they are only Gulf of Mexico players. WRONG. These guys are branching out all over the world. Take some time and read the articles. I am so positive about this sector. Can't wait to watch it all unfold.

If you're nervous, find a good one (HERO is) and see what happens. If you must wait until the 50 MA falls below the price, that'll work. But you're a wuss. Just kidding. Happy investing!

1 Comments – Post Your Own

#1) On July 06, 2007 at 10:21 PM, JohnnyLC (35.42) wrote:

This blog entry was what originally got me interested in the Oil sector.  By early March, I ended up allocating half of my retirements on DIG, DO, BHI, RIG, and GSF.  I’m very happy with the results and still think these companies are a good buy at the current price.

Thank you for the insightful blogs.  You are a true asset to the motley fools community.

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