Oil Services Checkpoint
Poor analysts - when they open their mouth, everyone can look at what they said. I blogged on Apr 11th about an analyst stating that RIG, NE and GSF were a HOLD. It didn't make much sense to me at the time. At this checkpoint, a month later, we have:
I would say if you knew a stock would beat the S&P by 7-13% in one month, in a bull market, it was a BUY.
It has been quite an impressive run for these stocks and you can't help but think a pulback might be imminent. The growth estimates have tamed a little, but these guys are still trading cheap. Jim Cramer loves them (its actually kind of scary how much he loves them). The key here, and I like the way Jim puts it, is intrinisic growth vs. cyclical. If you believe that we have made a fundamental shift in oil and that it simply will be harder and harder to find and thus driving drilling and oil services technology, these stocks (including the holdings of OIH or XES) are insanely cheap.
If you believe that all this unrest in the middle east and Nigeria will pass, oil will flood the market and rig capacity will soon surpass demand then these stocks are probably reasonably priced.
I like the former.