When I threw off the covers this morning to punish my alarm clock for waking me up, I was met with a particularly uncomfortable experience: cold. Having grown up in New Jersey, I know that San Francisco doesn't really get cold, but it does stay mild enough most of the year that I start to think that I have some right to weather in the mid-60s. It's tough to complain, though, since I know I'm not the only one waking up to some cold winter weather lately.
On Monday, Brett Favre was battling through the Seattle snow during the Green Bay Packers' Monday night showdown with the Seahawks. It's no better here in midweek -- The Weather Channel reported that the Rockies are seeing record lows and a healthy dose of snow, while Montana is down in the single digits. Record highs in the Midwest have been snapped, and it's back to the 20s for Nebraska. Even the Northeast, which is having some nice, mild weather right now, is expected to get slammed with a cold front going into the weekend.
What does this all add up to? People across the country cranking up their thermostats. So I turned to The Motley Fool's new community-research service, Motley Fool CAPS, to find out what the herd had to say on the topic of oil and gas.
Of the oil and gas complex over the past 30 days, it's been the Oil and Gas Equipment and Services boys that have done the best as a group -- they are collectively up nearly 10% in the last month. Here are a few of the top picks from CAPS.
Oil and Gas Equipment and Services
|
Stock |
CAPS Rating |
30-Day Change |
1-Year Change |
|---|---|---|---|
|
Hydril (NASDAQ:HYDL) |
***** |
33.3% |
18.4% |
|
BJ Services (NYSE:BJS) |
***** |
7.2% |
(4.9%) |
|
Helix Energy Solution Group (NYSE:HLX) |
***** |
9.6% |
(2.5%) |
|
Smith International (NYSE:SII) |
***** |
8.6% |
16.9% |
|
Petro Geo Services ASA (NYSE:PGS) |
***** |
14.3% |
141.9% |
Hydril, which makes pressure-control equipment for deep drilling, has 49 total ratings in CAPS, with only two underperforms and a perfect record among the All-Stars who have rated the stock. All-Star Robika01, who jumped on board toward the end of October, saw the prior weakness in the stock as temporary:
The stock was hammered due to a drop in oil and a sector rotation out of oil stocks. Excellent business model, strong cash position, no debt -- likely to weather current storm and rise strongly in '07.
Lehman Brothers , one of the top Wall Street firms tracked in CAPS and ranked in the 97th percentile overall, saw a similar picture and gave Hydril the nod at the beginning of November. While Lehman's upgrade did its part to push up the stock, Hydril also reported a stronger-than-expected third quarter and followed that up by announcing a $150 million share buyback.
The race to find oil reserves for the ever-hungry U.S. and for developing countries such as India and China could mean very good things for Hydril. As strong demand for oil encourages drillers to get more adventurous, it's likely we'll see more deepwater sites like Chevron's (NYSE:CVX) Jack II -- sites that are right in the sweet spot for Hydril equipment.
Continuing the theme of profiting from declining oil reserves, BJ Services' core business is in well-stimulation services, an area that's using various methods to increase the productivity of existing oil wells. Similarly, Helix Energy specializes in servicing oil fields that are considered marginal either because of the age of the field or because it's in a deepwater location that would be costly to drill. Demand for these types of activities should increase as demand for oil makes them even more economical. Teechur101, the most recent of the 30 among CAPS All-Stars to give an outperform rating to BJ Services, likes the stock as a play on the overall oil-services theme. BJ in particular, he says, has a "lower [P/E] than the industry average, and ROA is significantly higher." Another BJ supporter has this to say:
BJ Services provides pressure pumping and other services to oil and gas producers. As conventional oil and natural gas production stagnates around the globe, exploration and production companies increasingly rely on BJ Services' topnotch stimulation technology to pump every last available bit of hydrocarbon out of a reservoir. Along with Halliburton and Schlumberger, BJ Services is one of the dominant players in the pressure-pumping industry. BJ Services' pressure-pumping technology now leads the way in the rapidly growing deepwater market, as well as the North American market, where aging oil fields increasingly require pressure-pumping services.
Support is even greater for Helix -- it has received 146 total ratings from CAPS members, and 145 of those have been outperforms. Helix carries an impressive 62-and-0 record in its favor among All-Stars. Jim Cramer (who is tracked in CAPS via TrackJimCramer) gave Helix a thumbs-down earlier in the year. That call has so far proved correct, but with the stock up more than 5% today, that could be changing.
Think the crowd is crazy and that buying anything in the oil and gas industry right now is serious folly? Let them know! If you're not already a member of CAPS, it's high time you joined the 14,426 other Fools who are already members. With 2,734 stocks rated, CAPS is a great way to find new investment ideas and, at the same time, to let that stock picker in you really shine. Even better, it's absolutely free, so get in the game!
More fun on CAPS:
- Is CAPS international? Mais oui!
- CAPS is full of surprises.
- Fighting is allowed.
Fool contributor Matt Koppenheffer has 37 active picks in his CAPS portfolio and is getting ready to make his move out of the middle of the pack. He does not own shares of any of the companies mentioned. The Fool's disclosure policy is strong like bull.
