David White

Buy, Sell, or Hold Fertilizer Stocks: Agriculture Bust (Part II)

The same situation should set up in the oil service stocks. These are all going down in sympathy with the decreasing prices of oil. However, the demand for oil services does not have a one to one relationship to the price of oil. In fact beyond a certain minimum prices, which we are currently no where close to, the demand for oil services (drilling, etc.) is relatively inelastic. This is especially true of the demand for the deep sea drilling services. Stocks such as RIG, which have been tanking recently in sympathy with the decreasing price of oil, should bottom out a little bit before the bottom of oil. These should be a terrific upside play eventually.