As I've been saying, a lot of charts are looking good for the first time in a long time. Oil Services has stunk for a while despite the record high crude prices - an interesting divergence. I've been adding exposure to old favorite
Core Laboratories (CLB) slowly the past few days, and today one stock that has completely befuddled me by it's weakness is finally showing signs of a "turn":
National Oilwell Varco (NOV). The valuation in this name is beyond ridiculuos. On this breakout over and above BOTH its 50 and 200 day moving averages (in 1 fell swoop) I am beginning to rebuild NOV, taking it from 0.4% of fund to 1.4%. If we break $130 on Core Laboratories I'll be adding there as well. (all you chart readers will see plainly obviously why) For NOV we want to see a break above $67.50 or so to confirm this move is true.
Previously held oil service names like
Cameron International (CAM), Smith International (SII) also are ramping - we seem to have a rotation here. Since I don't want to add any more names to my already bulging portfolio I'm simply adding exposure through the 2 names I already own in the 'sector'. It's been a long time since this group acted healthy.
Somehow I still feel ilke this is April Fools and all this buying will blow up at 8:30 AM tomorrow morning but have to respect the strength in these charts... so I'll have mental stops placed on all these recent purchases and if stocks start to break down I'll go back to defensive mode very quickly.
Long Core Laboratories, National Oilwell Varco in fund; no personal positions
6 comments:
Any reason you saw for these sleepers to ramp up. I was watching these names for along time..and lookslike money pouring into theses..very heavily beaten stocks..especially SII.
Oil over $100? :)
I've been curious why the lag, also the oil drillers - ATW and DO. Just been asleep while oil continues to ramp.
Could be as simple as rotation. Not really that interested in why, just "is". Since it is happening now, looks like time to take advantage of it at least until hedge fund computers say they hate these stocks again ;)
I really like ATW and RIG, but I took some off the table with ATW. Nothing wrong with the company - looks great, but the stock/sector just isnt getting attention. I think the concensus is that even if oil is over 100, its not going much higher as long as the US slowdown overhangs, and china SLOWS to a measly 8%. Other sectors have just been mopping up the liquidity. Also, the credit market may be impacting the ability to get deals signed. But I think that's just a temporary issue. Good projects find good financing. As for the chart. ATW has this big symmetrical triangle shaping up, and it just hit it on the upper side. I'm hoping I can pick it up again, when its in the middle or the lower half.
NOV decided to rip just after I sold it. The #$!%! I'd be careful, though. If oil corrects the oil service companies will be thrown out with the bathwater. I do like NOV's valuation, however. That PEG is nice!
You may also want to take a look at Superior Energy Services (SPN). This has been a tremendously fast-growing stock within the oil-services sector. They are kind of a uniques animal in that they dabble in a little bit of everything. Their primary business is oil rig maintenance in the Gulf Coast, but they have also are diversified into oil service tool rental, which is spread out over the globe. In addition, they take over some older, less well-performing oil fields and try to coax them into higher production. Also, they have a pretty firm grip on the oil-head capping service in the Gulf of Mexico. Basically, when a well is done with, it needs to be shut down to meet certain environmental standards. From what I have seen, this is a pretty big market (SPN actually is benefited when a well drys up) and SPN is a pretty big player in this area.
This stock's revenue and profits seem to grow consistently each quarter, but has traded in a pretty tight range (since I've held it). Maybe the recent run-up in oil-service companies will lift up SPN along with it.
Thanks for the tip - I've heard the name before but never looked into it. I'll look and see but it appears the hedge fund place these all with the same weighting - they are either good or bad so either they all sell off or all do well... very similar charts across the group despite the differences in each company.
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