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Fueled by a rally in the stock market and the price of oil, many oil related stocks are now trading near 52-week highs. While the price of oil has dipped below recent highs in the past few days, it is likely to remain a solid sector for investors as tensions in the Middle East continue to escalate, and also because central banks around the world continue to print money and announce easy money policies. The Federal Reserve recently announced plans for additional quantitative easing, and this has caused the dollar to decline in value. Investing in oil stocks can protect investors from inflation, a declining dollar, and central bank policies, because oil can't be printed like paper money. That is why investing in the oil sector, (particularly on dips), is likely to reward investors in the long-term. Furthermore, there are a number of oil stocks that are still trading at very attractive valuations, and therefore could have a substantial amount of upside. Here is a closer look at 3 oil sector stocks that look like bargains now:

Halliburton Company (NYSE:HAL) is one of the largest oil services firms, with operations in many countries worldwide. This stock has rebounded off of recent lows, but the shares still look cheap. It also pays a dividend yield of about 1%, which is not significant, but it could be poised to raise the dividend substantially in the coming years, as the payout ratio is just around 10% of earnings. This company recently reported strong financial results for the second quarter of 2012. Income from continuing operations came in at $745 million, or 80 cents per diluted share. This compares favorably with income from continuing operations for the first quarter of 2012, of $635 million, or 69 cents per diluted share. Halliburton shares are trading for just about 10 times forward earnings, which is well below the average of around 13 times for a stock in the S&P 500 Index. On July 24, 2012, Standpoint Research gave Halliburton shares a buy rating and set a $41 price target. However, other analysts have much higher expectations, including a $56 price target and overweight rating by Barclays. At current levels, a run to $56 would provide investors with gains of about 55%.

Here are some key points for HAL:
Current share price: $36.03
The 52 week range is $26.28 to $40.43
Earnings estimates for 2012: $3.17 per share
Earnings estimates for 2013: $3.47 per share
Annual dividend: 36 cents per share which yields 1%

Abraxas Petroleum Corp., (NASDAQ:AXAS) is an oil and gas exploration and production company with a focus on projects located in the Mid Continent, Permian Basin, Rocky Mountains, and other areas. Of particular interest are the projects this company has in the Bakken Range, especially as the investment potential of that region is hightened with the recent announcement by Exxon (NYSE:XOM) to buy assets from Denbury Resources (NYSE:DNR). In a deal valued at about $1.6 billion, Exxon agreed to buy Denbury's Bakken Range assets. Since Abraxas has Bakken and other valuable assets, it could be an attractive takeover target, or possibly an asset sale candidate, much like the deal Exxon made with Denbury. One recent article on Seeking Alpha discusses some potential Bakken buyout candidates, which includes Abraxas. With a market capitalization of just about $220 million, this company could fit within the buyout budget of many larger oil companies, but an asset sale deal might be best for shareholders in the long-term. Either way, the stock looks cheap and likely to continue rebounding. Analysts expect earnings to grow nearly six-fold between 2012 and 2013, and that growth could continue as new wells come on line in the near future. Some analysts have price targets for Abraxas shares at about $5, which could provide investors with a double, based on current prices.

Here are some key points for AXAS:
Current share price: $2.45
The 52 week range is $1.86 to $4.45
Earnings estimates for 2012: 3 cents per share
Earnings estimates for 2013: 18 cents per share
Annual dividend: none

Weatherford International Ltd. (NYSE:WFT) has faced some challenges that appear to have kept some investors away. However, that could be creating an opportunity to buy well below fair value and even below book value, which is around $13.05 per share. Weatherford looks cheap because most stocks trade at a substantial premium to book value. For example, the S&P 500 Index currently trades for more than double book value. Another factor to consider is that Weatherford trades for just about 9 times forward earnings, while the average stock in the S&P 500 Index trades for about 16 times earnings.

Weatherford is a global provider of offshore drilling and other services to the oil and gas industry. Some analysts recently stated that Weatherford could be an attractive takeover target for a company like General Electric (NYSE:GE), however, the company might need to finalize dealing with a restatement of earnings issue which could involve about $225 to $250 million in adjustments, as well as other legal issues before a buyer would step in. However, the stock looks undervalued and analysts seem to agree: On July 26, 2012, FBR Capital gave Weatherford shares an outperform rating and set a $17 price target. With the stock at just $13 now, a move to $17 would provide investors with gains of almost 40%.

Here are some key points for WFT:
Current share price: $13
The 52 week range is $10.85 to $18.33
Earnings estimates for 2012: $1.08 per share
Earnings estimates for 2013: $1.45 per share
Annual dividend: none

Data is sourced from Yahoo Finance. No guarantees or representations
are made. Hawkinvest is not a registered investment advisor and does
not provide specific investment advice. The information is for
informational purposes only. You should always consult a financial
advisor.

Source: 3 Oil Stock Bargains Where Analysts Expect Big Gains