The oil services sector (NYSEARCA:OIH) has had a tough start to the week (see chart) on the back of a warning from oil services giant Schlumberger (NYSE:SLB) stating that they see North American drilling activity and rig count in the first quarter lighter than it expected. Credit Suisse has a different view for full year 2013 and it expects the rig count to rise by 130-170 rigs by the end of the year. Given the continued expansion of oil & gas production in North America, I believe Credit Suisse has the right longer term view. Here are three oil services stocks the analyst firm likes at these levels.
Forum Energy Technologies (NYSE:FET) provides manufactured technologies and applied products to the energy industry.
4 reasons FET is a good growth play at under $27 a share:
- The company is predicted to have 12% revenue growth for both FY2013 and FY2014. The stock is selling with a five year projected PEG of under 1 (.73).
- Forum sells at a reasonable 12x FY2014's earnings.
- The median price target by the 12 analysts that cover the stock is $31 a share. FBR Capital upgraded the shares to "Outperform" in February.
- The company has more than doubled operating cash flow over the past two fiscal years. It also just won a contract from Helix Energy (NYSE:HLX) to supply the energy concern a couple of remotely controlled vehicles.
Superior Energy Services (NYSE:SPN) provides specialized oilfield services and equipment to oil and gas companies.
4 reasons SPN has value at just over $25 a share:
- SPN is cheap at just 98% of book value and under 10x trailing earnings.
- The company is projected to grow revenues at around an average 8% CAGR over the next two years and the stock sports a five year projected PEG of under 1 (.67).
- The stock is selling near the bottom of its five year valuation range based on P/CF, P/S and P/CF.
- The 15 analysts that cover the stock have a $31 median price target on the shares. The company has doubled operating cash flow (OCF) and the stock is selling at just four times OCF.
Halliburton (NYSE:HAL) is one of the largest oil services firm in the world.
4 reasons HAL is a buy at under $40 a share:
- The 27 analysts that cover the stock have a $48 median price target on the shares.
- The company has beat earnings estimates 10 of the last 12 quarters (it was in-line on earnings the other two quarters).
- HAL is another oil services stock that is selling with a five year projected PEG of under 1 (.85).
- The company has grown operating cash flow by better than 65% over the last two fiscal years and the stock is selling in the bottom half of its five year valuation range based on P/E, P/CF, P/S and P/B.