Weatherford: Key Catalysts Should Lift This Cheap Driller Higher

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Oil service stocks have caused their investors much anxiety and some deep short term losses over the last three months. However, they have started to bounce back from deeply oversold territory over the past couple of trading sessions. One stock in the sector, Weatherford International (NYSE:WFT), looks particularly compelling given recent catalysts.

Key catalysts for Weatherford:

  • It just won a huge $843mm contract in Iraq.
  • Two insiders bought new shares in May.
  • Barclays came out and stated earnings revisions should have bottomed and were positive on the company in a Barron's piece recently.

4 reasons WFT is a good bargain at under $13 a share:

  1. WFT is selling near the bottom of its five year valuation range based on P/S, P/CF and P/B.
  2. The stock still has 50% upside to get to the median analysts' price target of $20 held by the 25 analysts that cover the stock.
  3. Weatherford is ridiculously cheap at just 95% of book value and sports a minuscule five year projected PEG (.21) that reflects the company's growth prospects are deeply discounted by the market.
  4. The stock looks like it has put in a technical bottom at this level (see chart).

(Click to enlarge)

Disclosure: I am long WFT.