The underlying trends in the first quarter were very favorable, as North American margins improved sequentially, despite a decline in the rig count, suggesting significant operating leverage as activity levels recover. Going forward, U.S. drilling permits have risen strongly (onshore and in the Gulf of Mexico) and the Deutsche Bank team believes the next catalyst for the group is an increase in the rig count.

With all of these positives, Deutsche Bank has four top stocks to buy, and some other favorite names.

Baker Hughes Inc. (NYSE: BHI) has seen a large bump in revenue from the increased Gulf of Mexico drilling. The Deutsche Bank price target on the stock is $59. The Thomson/First Call estimate for the stock is much lower at $49.50. Investors receive a 1.30% dividend.

Halliburton Co. (NYSE: HAL) is another large cap stock to buy. Although the company is indemnified from the operator in its contract from the Deepwater Horizon/Macondo disaster in 2010, negative press and the possibility of an adverse settlement has kept a lid on the stock. The Deutsche Bank price target is 56. The consensus target for the stock is lower at 50. Shareholders receive a 1.10% dividend.

Nabors Industries Ltd. (NYSE: NBR) is a pure drilling play, and free cash flow, which had been negative in recent years, is expected to reach $800 million this year, and more than $1 billion in 2014, according to management guidance. Deutsche Bank has $24 price target. The consensus for the stock is considerably lower at $18. Investors are paid a 1.00% dividend.

Hercules Offshore Inc. (NASDAQ: HERO) is the small-cap stock to buy on the Deutsche Bank list. The company is enjoying a strengthening Gulf of Mexico pricing environment with leading edge jackup rates up 8% year-to-date and more than 50% versus the first four months of last year. The Deutsche Bank price target is $10, and the consensus is at $9.

Schlumberger Ltd. (NYSE: SLB) was another mega-cap giant mentioned in the report. Deutsche Bank expects it also to benefit greatly as the industry redeploys drilling rigs. The consensus price target for the stock is $91.50. Shareholders are paid a 1.60% dividend.

Weatherford International Ltd. (NYSE: WFT) hit a 52-week high last week. The company provides equipment and services used in the drilling, evaluation, completion, production and intervention of oil and natural gas wells worldwide. The consensus price target for the stock is $15.50.

The Deutsche Bank analysts continue to see the large-cap diversified service companies as best positioned over the balance of 2013. They also have noticed the U.S. land market bottoming out, led by pressure pumping and completion related services. The larger players, with their ability to bundle services and deliver the efficiencies that customers increasingly demand, seem to be taking share against this backdrop.

With the United States’ increasing role as a major oil exporter, domestic work should only increase for the top companies featured at Deutsche Bank. These top stocks to buy may be an investor’s best way to take advantage of this increase.

The oil service research team at Deutsche Bank A.G. (NYSE: DB) are now convinced that a slow but sure normalization of activity is underway. That renewal of activity they believe will lead to a surprise increase in profitability in 2013 and perhaps beyond. While they are generally in line with global capital expenditure estimates of a 9.4% increase, their estimate of 3.4% North American growth is above consensus.

In an odd twist of irony, the same area that started an aversion to oil field services may prove to be the strongest area of growth this year. The Gulf of Mexico, where the Macondo well disaster happened in April of 2010 may lead the recovery with a 30% increase in spending in deepwater drilling.

The other catalyst seen for a rebound in the sector is a slow but sure recovery in the long suffering natural gas market. While this recovery will not happen overnight  the Deutsche Bank analysts are convinced that it will play a part in the overall sector strengthening. That could be a big win for long-term patient investors if these stocks can recover anywhere close to their highs.

In the large cap arena and also as their top pick in the sector, Baker Hughes Inc. (NYSE: BHI) trading today at $42.39 has it’s price target lifted from $55 to $57. That’s the highest estimate on the street where consensus is $48. The other large cap favorite is Halliburton Co. (NYSE: HAL) where they upped the price target to $53 from $51. Consensus is $43.

The top pick in mid-caps is Nabors Industries Ltd. (NYSE: NBR). Trading today at $14.91 the target price is $27 up from $25. That is significantly above Thomson/First call estimate of $17.50.

The name in small-caps that is their top pick is Hercules Offshore Inc. (NASDAQ: HERO). Trading today at $6.68 the target price is $8. This is one name where they did not increase the price target. The street consensus is target is $7

In their report Deutsche Bank also raised the price targets for Basic Energy Services Inc. (NYSE: BAS) from $16 to $17. Trading today at $11.75 the street estimate is $12. Patterson-UTI Energy Inc. (NASDAQ: PTEN) from $27 to $28. Trading at $19.02 the street is at $20. Cameron International Corp. (NYSE: CAM) from $76 to $78. Trading at $58.75 with the street at $66.50. Finally, Weatherford International (NYSE: WFT) from $20 to $21. Trading at $11.92 the street forecast is $13.

From judging by the street consensus versus the Deutsche Bank price targets on most of these names, this is clearly a very bullish call. But with oil prices continuing to rise and natural gas firming it make’s sense to put investment dollars to work in a sector that had very poor price performance last year.

Check Point Software Technologies Ltd. (NASDAQ: CHKP) started as Market Perform at BMO.

Cigna Corp. (NYSE: CI) reiterated as top pick with Outperform rating and $59 target price at Credit Suisse.

ConAgra Foods Inc. (NYSE: CAG) reiterated Buy on Ralcorp deal with $33 target at BofA/ML.

Corning Inc. (NYSE: GLW) reiterated Buy with $20 target at Argus.

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) reiterated Buy and raised target to $45 at Canaccord Genuity.

Idenix Pharmaceuticals Inc. (NASDAQ: IDIX) started as Buy with $7 target at Deutsche Bank.

LinkedIn Corp. (NYSE: LNKD) started as Neutral at Cowen.

Microchip Technology Inc. (NASDAQ: MCHP) cut to Underperform as Bear of the Day at Zacks.

Nabors Industries Ltd. (NYSE: NBR) raised to Buy at Deutsche Bank.

Pandora Media Inc. (NYSE: P) started as Neutral at Cowen.

Pioneer Energy Services Corp. (NYSE: PES) raised to Buy with $10 target at Deutsche Bank.

Rowan Companies PLC (NYSE: RDC) reiterated Outperform but lowered target to $45 at Credit Suisse, as well as cut to Hold at Deutsche Bank.

Royal Caribbean Cruises Ltd. (NYSE: RCL) raised to Outperform as Bull of the Day at Zacks.

SunTrust Banks Inc. (NYSE: STI) reiterated Buy with $35 target at Argus.

Synopsys Inc. (NASDAQ: SNPS) reiterated Buy with $38 target at BofA/ML.

UnitedHealth Group Inc. (NYSE: UNH) reiterated Outperform with $59 target at Credit Suisse.

Veolia Environnement S.A. (NYSE: VE) raised to Overweight at HSBC.

Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) cut to Hold at Argus.

Vodafone PLC (NASDAQ: VOD) started as Outperform at Baird.

JON C. OGG

At the one end of the compensation to market cap ratio are relatively small companies that have very highly paid CEOs. At the other are chief executives at large companies who work for more modest sums and are either paid well for extraordinary financial results or have boards that believe that CEOs should not be paid like sultans

Read: America’s Least Valuable CEOs

Also Read: America’s Most Valuable CEOs

Every year, the media come out with lists of American public company CEOs who makes tens of millions of dollars. While some may have earned the money because of phenomenal results, others are paid well despite poor results. Our list of least valuable CEOs is based on chief executives who are paid handsomely, even though they run corporations with modest market caps and sales. Additionally, most of their companies have not done well, either financially or in terms of stock market performance.

Some of the companies on this list are run by founders or large shareholders. These people may well be in a position to have outsized influence over their own pay packages, which puts shareholders in an impossible position to effectively protest compensation. Other CEOs have been hired fairly recently to turn companies around. They have been paid well to take jobs in which they are expected to post great improvement, but they have not done so yet, and may never. .

24/7 Wall St. identified the least valuable CEOs based on executive pay relative to company market cap. We reviewed the market cap and CEO compensation for every S&P 500 company as of Dec. 31, 2011. If a company’s stock performance exceeded that of the S&P 500 Index between December 30th, 2011 and November 12th, 2012 it was excluded. CEOs who joined their companies or were promoted during the year in question have been included for the purpose of our measurements.

These are America’s least valuable CEOs.

The Active Network Inc. (NYSE: ACTV) cut to Market Perform at Raymond James and cut to Neutral at Citigroup.

Blackstone Group L.P. (NYSE: BX) reiterated Buy and raised target to $18 at Argus.

Brinker International Inc. (NYSE: EAT) reiterated Buy with $40 target at Argus.

Charter Communications Inc. (NASDAQ: CHTR) started as Hold at Deutsche Bank.

CNO Financial Group (NYSE: CNO) named Bull of the Day at Zacks.

Dean Foods Co. (NYSE: DF) started as Neutral at Credit Suisse.

Eldorado Gold Corp. (NYSE: EGO) started as Overweight at Morgan Stanley.

Emulex Corp. (NYSE: ELX) reiterated Buy with $11 target at Argus.

Enterprise Products Partners L.P. (NYSE: EPD) reiterated Outperform and raised target to $61 at Credit Suisse.

Exelon Corp. (NYSE: EXC) cut to Hold at Jefferies.

First Solar Inc. (NASDAQ: FSLR) cut to Hold at Cantor Fitzgerald.

General Motors Co. (NYSE: GM) maintained Outperform but cut target to $35 at Credit Suisse.

Guess? Inc. (NYSE: GES) cut to Hold at Jefferies.

MannKind Corp. (NASDAQ: MNKD) raised to Neutral at JPMorgan.

Nabors Industries Ltd. (NYSE: NBR) named Bear of the Day at Zacks.

UBS A.G. (NYSE: UBS) raised to Buy at Soc-Gen.

Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) cut to Sell at Goldman Sachs.

JON C. OGG

Akamai Technologies Inc. (NASDAQ: AKAM) raised to Outperform at Oppenheimer and raised to Buy at Canaccord Genuity.

Banco de Chile (NYSE: BCH) cut to Neutral at Credit Suisse.

Banco Santander-Chile (NYSE: BSAC) cut to Neutral at Credit Suisse.

Boeing Co. (NYSE: BA) maintained Outperform but cut target to $86 at Credit Suisse.

BP PLC (NYSE: BP) started as Neutral at Goldman Sachs.

Brocade Communications Systems Inc. (NASDAQ: BRCD) named value stock of the day at Zacks.

Ciena Corp. (NASDAQ: CIEN) raised to Outperform at FBR.

Crocs Inc. (NASDAQ: CROX) cut to Neutral at Stern Agee.

Cubist Pharmaceuticals Inc. (NASDAQ: CBST) started as Sell at Cantor Fitzgerald.

EMC Corp. (NYSE: EMC) reiterated Buy and $36 target at Argus.

Facebook Inc. (NASDAQ: FB) maintained Hold with view in high-$20s at Argus.

Hibbett Sports Inc. (NASDAQ: HIBB) maintained Outperform but named as Bull of the Day at Zacks.

Honeywell International Inc. (NYSE: HON) raised to Outperform at Bernstein.

Intel Corp. (NASDAQ: INTC) named Bear of the Day at Zacks.

Intersil Corp. (NASDAQ: ISIL) cut to Sell at Citigroup.

Nabors Industries Ltd. (NYSE: NBR) cut to Hold at Argus.

Norfolk Southern Co. (NYSE: NSC) cut to Neutral at BofA/ML.

JON C. OGG

Activision Blizzard Inc. (NASDAQ: ATVI) raised to Overweight at Piper Jaffray.

Arena Pharmaceuticals Inc. (NASDAQ: ARNA) started as Underperform at Credit Suisse.

Barclays PLC (NYSE: BCS) cut to Neutral at Credit Suisse.

Brinker International Inc. (NYSE: EAT) named Bull of the Day at Zacks.

CIT Group Inc. (NYSE: CIT) started as Perform at Oppenheimer.

Cliffs Natural Resources Inc. (NYSE: CLF) cut to Neutral at UBS.

Express Scripts Inc. (NASDAQ: ESRX) maintained Hold but raised 2012/2013 earnings estimates at Argus.

Monster Worldwide Inc. (NYSE: MWW) raised to Outperform from Neutral at Zacks.

Nabors Industries Ltd. (NYSE: NBR) named Bear of the Day at Zacks.

Nokia Corp. (NYSE: NOK) cut to Sell at Deutsche Bank; Cut to Sell at Soc-Gen; Cut to Sell at S&P Equity Research.

Novo Nordisk A/S (NYSE: NVO) raised to Neutral at Nomura.

Orexigen Therapeutics Inc. (NASDAQ: OREX) started as Outperform at Credit Suisse.

Pep Boys – Manny, Moe & Jack (NYSE: PBY) started as Neutral at Credit Suisse.

Randgold Resources Ltd. (NASDAQ: GOLD) raised to Overweight at JPMorgan, but shares were cut to Neutral at Nomura just the day before.

Stanley Black & Decker Inc. (NYSE: SWK) raised to Overweight at Morgan Stanley.

SunTrust Banks Inc. (NYSE: STI) raised to Overweight at JPMorgan.

Vistaprint N.V. (NASDAQ: VPRT) raised to Sell from Strong Sell at S&P Capital IQ … Is that just “less of a sell but still a sell” rating?

Credit Suisse gave a model portfolio trade alert called “go long” on KeyCorp (NYSE: KEY). It said, “We look for 3Q12 and 4Q12 EPS to beat market expectations, and believe investors will increase EPS estimates for ’13/’14 in 2H12. We believe this will be driven by core efficiency ratio improvement in 2H12.”

JON C. OGG

Baker Hughes reported EPS of $1.00 on revenue of $5.32 billion, compared with a consensus estimate for EPS of $0.77 on revenue of $5.26 billion. The company posted improved revenue in every geographic segment except North America, and North America was the only segment to see profit decline.

The story is very similar for Schlumberger. The company posted adjusted EPS of $1.05 on revenue of $10.45 billion, compared with the consensus estimate for EPS of $1.00 on revenue of $10.41 billion. North American revenue declined by about 1.7% sequentially due to the expected spring weather in Canada and “continued pricing pressure in the US land hydraulic fracturing market.” International revenue grew by 9%, more than covering up the shortfall in the United States and Canada.

Schlumberger’s costs rose 30% year-over-year for the second quarter, and Baker Hughes saw costs rise by about 14%. Partly that is due to rising prices for guar beans, which the companies use in their hydraulic fracturing fluids. Halliburton Co. (NYSE: HAL) warned on this price rise in early June.

Earlier this week Nabors Industries Inc. (NYSE: NBR) warned that its earnings would be hit by higher costs due to a slowdown in pressure pumping, a slowdown noted by both Baker Hughes and Schlumberger today.

Halliburton, National Oilwell Varco Inc. (NYSE: NOV) and Weatherford International Inc. (NYSE: WFT) report quarterly results next week, and lowered expectations offer an opportunity for these companies to shine as well. The consensus estimate for Schlumberger’s second-quarter EPS dropped by $0.05 from April to July, while Baker Hughes saw its EPS estimate cut by just $0.01 over the same period. Halliburton’s EPS estimate was cut $0.13, and the other two had their EPS estimates cut by $0.03.

Schlumberger’s shares are trading up about 2% in premarket activity this morning, at $69.93 in a 52-week range of $54.79 to $95.53.

Shares of Baker Hughes are up about 5% at $43.82 in a 52-week range of $37.08 to $81.00.

Paul Ausick

The shortfall is attributable to lower than expected results primarily from its Pressure Pumping and, to a lesser extent, its International operations, partially offset by better results in its other US land operations. The lower results are primarily attributable to higher costs.

The company’s chairman and CEO was a little more specific:

The largest component of the shortfall is attributable to the increasingly competitive spot market in pressure pumping where pricing and utilization continued to deteriorate while costs spiked in the quarter.

Translation: costs are rising and rig counts are falling. Nabors is a land-based driller, and that business has been hit by the reduction in onshore U.S. natural gas drilling. As fewer wells are drilled, the rig operators are forced to compete on price, even as their costs rise. It is not a pretty sight.

Nabors expects to take a noncash impairment charge of approximately $150 million in the second quarter, as well as another $150 million reduction in its carrying value on reserves for its ownership share of NFR Energy.

Just to be on the safe side, Nabors also announced that it has adopted a shareholder rights plan that allows current shareholders to purchase a new series of preferred stock. The plan will remain in effect until July 16, 2013, unless extended, redeemed or exchanged by Nabors.

Poison pill aside, Nabors’ warning could signal problems for other services companies. Schlumberger Ltd. (NYSE: SLB) and Baker Hughes Inc. (NYSE: BHI) report earnings this Friday, and Halliburton Co. (NYSE: HAL) reports next Monday. National Oilwell Varcol Inc. (NYSE: NOV) and Weatherford International Ltd. (NYSE: WFT) also report later next week.

Crude prices were about $20 a barrel higher in the first quarter than they are now, and while natural gas prices have risen they are still barely above a breakeven point. Like Nabors, land-based drillers are likely to see higher costs, somewhat lower rig counts or both.

Schlumberger is expected to post EPS of $1.00 on revenue of $10.4 billion. In the second quarter of 2011, the company offered up EPS of $0.87 on revenue of $9.62 billion. Earnings expectations have fallen by $0.05 per share in the past 90 days.

Baker Hughes is expected to post EPS of $0.77 on revenue of $5.26 billion. A year ago the company reported EPS of $0.93 on revenue of $4.74 billion. Earnings expectations have fallen just $0.01 in the past 90 days.

Halliburton is expected to post EPS of $0.75 on revenue of $6.96 billion. A year ago the company’s EPS came to $0.81 on revenue of $5.94 billion. EPS expectations have fallen by $0.13 per share in the past 90 days.

National Oilwell Varco’s EPS forecast is $1.40, on revenue of $4.43 billion. Last year the company posted EPS of $1.14 on revenue of $3.51 billion. EPS expectations have dropped by $0.03 in the past 90 days.

Weatherford is expected to post EPS of $0.24 on revenue of $3.64 billion. The company posted EPS of $0.17 on revenue of $3.05 billion a year ago. EPS expectations have fallen by $0.03 in the past 90 days.

Offshore drillers are faring no better, primarily due to lower activity as crude prices decline. Transocean Ltd. (NYSE: RIG) and Diamond Offshore Drilling Inc. (NYSE: DO) are expected to post quarterly EPS and revenue well below last year’s second quarter.

The Nabors warning and the lower expectations for other services companies are having no negative impact on share prices in the first half-hour of trading this morning, likely because the news already had been priced in, and expectations are high today that Ben Bernanke will signal another round of quantitative easing in his testimony before a Senate committee.

Nabors shares are up 1.2% at $13.36 in a 52-week range of $11.05 to $27.63. However the offshore companies, Transocean and Diamond, are both down slightly.

Paul Ausick

ARM Holdings PLC (NASDAQ: ARMH) Started as Overweight at Piper Jaffray.
AvalonBay Communities, Inc. (NYSE: AVB) Raised to Outperform at Credit Suisse.
Gannett Co., Inc. (NYSE: GCI) Started as Equalweight at Barclays.
Deckers Outdoor Corporation (NASDAQ: DECK) Cut to Neutral at Credit Suisse; Maintained Buy with $105 target at Canaccord Genuity.
First Solar, Inc. (NASDAQ: FSLR) Cut to Neutral at Susquehanna.
Forest Oil Corporation (NYSE: FST) Cut to Hold at Canaccord Genuity.
Monster Beverage Corporation (NASDAQ: MNST) Reiterated Conviction Buy List and raised estimates by Goldman Sachs.
Marriott International, Inc. (NYSE: MAR) Raised to Conviction Buy List at Goldman Sachs.
Nabors Industries Ltd. (NYSE: NBR) Raised to Buy with $30 target at Argus.
PolyOne Corporation (NYSE: POL) named as Value Stock of the Day at Zacks.
Red Robin Gourmet Burgers (NASDAQ: RRGB) named as Bull of the Day at Zacks.
Sunoco, Inc. (NYSE: SUN) Cut to Underperform as Bear of the Day at Zacks.
Salesforce.com (NYSE: CRM) Maintained Neutral but raised target to $145 on Credit Suisse; Raised to Buy at ThinkEquity; Reiterated Buy and raised target to $170 at Canaccord Genuity.
Target Corporation (NYSE: TGT) Raised to Buy at Jefferies.
Trina Solar Limited (NYSE: TSL) Cut to Market Perform at Wells Fargo; Cut to Negative at Susquehanna.

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JON C. OGG