What Will Pop in 2013 for Energy and Materials?

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Joel: Definitely the services were a strong industry in 2012. Basically, the first three quarters you saw a lot of boost there. Going forward, do you see another sector that you really like for 2013?

Taylor: I do. I'm really looking not only offshore but, to get more specific with it, the deepwater. You're looking at companies... You've got a Hercules, which concentrates more on just offshore drilling, in the shallow waters, but deepwater I think is going to be the fastest-growing industry in the energy sector for 2013 and maybe even 2014, strictly because of the pent-up demand.

There's exploration finds all over the place. We thought a shale boom was big in the last couple of years; I think deepwater could outlast that even to a greater extent, so I'm looking at Ensco, I'm looking at RIG, I'm looking at maybe a Seadrill who's really starting to emerge, and a Noble Corp as some of the smaller competitors, in comparison to the Ensco and RIG, Transocean.

Deepwater is probably my number one focus right now in the energy space. If I have to look outside of energy and within the materials sector, I'm looking at some fertilizer companies because of the natural gas glut that you've seen really produce some low feedstocks for them.