Buying Core Labs and National Oilwell Varco on Ridiculously Low Valuations

As I've been saying, a lot of charts are looking good for the first time in a long time. Oil Services has stunk for a while despite the record high crude prices - an interesting divergence. I've been adding exposure to old favorite Core Laboratories (CLB) slowly the past few days, and one stock that has completely befuddled me by it's weakness is finally showing signs of a "turn": National Oilwell Varco (NOV). The valuation in this name is beyond ridiculous. On this breakout over and above both its 50 and 200 day moving averages (in 1 fell swoop) I am beginning to rebuild NOV, taking it from 0.4% of fund to 1.4%.

If we break $130 on Core Laboratories I'll be adding there as well. (all you chart readers will see plainly obviously why) For NOV we want to see a break above $67.50 or so to confirm this move is true.

Previously held oil service names like Cameron International (CAM), Smith International (SII) also are ramping - we seem to have a rotation here. Since I don't want to add any more names to my already bulging portfolio, I'm simply adding exposure through the 2 names I already own in the 'sector'. It's been a long time since this group acted healthy. Somehow I still feel ilke this is April Fool's and all this buying will blow up at 8:30 AM tomorrow morning, but I have to respect the strength in these charts... so I'll have mental stops placed on all these recent purchases and if stocks start to break down, I'll go back to defensive mode very quickly.

Disclosure: Long Core Laboratories, National Oilwell Varco in fund; no personal positions

Comments

[mixter:]

Let's revive the 1973 oil embargo bumper stickers that read,"Let the Yankees Freeze to Death in the Dark!" Maybe they will be more receptive to drilling on Federal lands, offshore, and in Alaska. The fools do not seem to understand the difference between net profit in dollars and net profit in percentage. That is the intelligence you can expect from Ivy League graduates. Also, the ten largest U. S. oil companies control less than 3% of the world's know oil reserves. Foreign countries control the rest.

2008 Apr 04 02:36 PM

[thinking ahead:]

My NOV 55 calls are 4X in 2 weeks. Mmmmmm Good.

2008 Apr 04 04:42 PM

[oilsands:]

Mixter, did you include Yates Petroleum in that calculation? They are not publicly traded, but hold more leased reserves in the US than any other company. I doubt the 3% figure for a variety of reasons, foremost being the oil companies propaganda to keep us involved in the middle east. Most of our oil comes from Canada and Mexico, then south America. Simply put, we don't need the middle east.

2008 Apr 06 11:40 AM