Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



There Are Profits to Be Reaped in Oil and Gas Equipment Companies

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect oil and gas equipment stocks to prosper over time because of our planet's persistent dependence on oil, the iShares Dow Jones US Oil Equipment Index ETF (NYSE: IEZ  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.47%.

This ETF has a bit of a mixed performance record, beating the world market over the past three years, roughly matching it over the past five, and badly underperforming it over the past year. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

With a low turnover rate of 13%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
Some oil and gas equipment companies had strong performances over the past year. Chart Industries  (Nasdaq: GTLS  ) , for example, specializing in equipment used in the production of hydrocarbon and industrial gas, advanced 19%. Bulls who expect natural gas to be fueling many vehicles in the near future like the company, as it supplies storage tanks, among other things. The company clearly believes in the future of liquefied natural gas, as it's been beefing up its LNG infrastructure manufacturing capacity to meet expected demand. Still, if natural gas prices rise considerably, the stock's future may not look quite as bright.

Many other companies in the industry didn't do as well last year, but could see their fortunes change in the coming years. Weatherford International (NYSE: WFT  ) , for example, sank 44%, partly due to an estimate that it will fork over some $100 million in settlements with multiple U.S. agencies investigating possible improper practices abroad. Bears worry that there may be further bad news and costs. The company has been plagued with tax-related problems, as well. On the plus side, though, Weatherford recently reported solid revenue growth, though its earnings disappointed analysts a bit.

Offshore drilling specialist McDermott International (NYSE: MDR  ) shed 41%, but sports a hefty and growing backlog of orders. Two months ago the stock surged 10% on news that the CEO and three other bigwigs bought sizable bunches of stock. There aren't many explanations for that other than the executives expecting the company's stock to rise.

Then there's Halliburton (NYSE: HAL  ) , down 37%. Yes, it has reported flat earnings recently, but they still exceeded analyst expectations, and revenue also beat expectations, rising 22%. The company has been very involved in fracking, but some see a possible pullback as natural-gas producers have been reining in their operations. Halliburton's operational diversification as well as its geographic reach bode well for the company, though, and many see it as undervalued these days.

The big picture
Demand for energy isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

If you're bullish on energy, learn about the one company in the energy sector that can hold fast no matter what oil costs – in our special free report, "The Only Energy Stock You'll Ever Need." Get the inside scoop while it lasts.

Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, holds no position in any company mentioned. Click here to see her holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Halliburton. The Motley Fool has a disclosure policy.

 We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1975790, ~/Articles/ArticleHandler.aspx, 10/22/2016 9:56:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 12 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
GTLS $32.01 Down -0.17 -0.53%
Chart Industries CAPS Rating: ****
HAL $48.43 Down -0.32 -0.66%
Halliburton CAPS Rating: ****
MDR $5.32 Down +0.00 +0.00%
McDermott Internat… CAPS Rating: ***
WFT $6.30 Down -0.01 -0.16%
Weatherford Intern… CAPS Rating: ****