What a difference a year can make. Even though the price of oil took a dive recently after a 100% gain off the lows posted in early 2016, prices have headed higher, and many on Wall Street feel that energy is the place to be for the rest of 2017. With the energy complex adding 159 drilling rigs in the first quarter of this year, that is the largest amount since the first quarter of 2010, and a sign that the industry has sprung back to life.
One area that makes sense for growth investors to own is oil field services, as the huge increase in the rig count means business, a lot of business. A new Deutsche Bank research report features three top pick service stocks to buy now. We also found two large capitalization company that they are also bullish on as well: Halliburton Co. (NYSE: HAL) and Schlumberger Ltd. (NYSE: SLB).
Halliburton shares are down almost 15% from recent highs printed in January. The company is one of the world’s largest providers of products and services to the energy industry. It serves the upstream oil and gas industry throughout the life cycle of the reservoir, from locating hydrocarbons and managing geological data to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field.
Halliburton is the second-largest provider of oil services and the number one player in pressure pumping services worldwide. For investors looking for an oilfield services company to add, this is arguably the best, and analysts feel it will be a huge benefactor as the frac market has tightened significantly and prices are 20% to 30% off the lows.
Schlumberger is a solid pick for more conservative accounts and the other large cap favorite at Deutsche Bank. This top oil services company is a supplier of technology, integrated project management and information solutions to the international oil and gas exploration and production industry. The company remains the largest oilfield services company in the world, with far-reaching operations all around the globe, and it could be poised for years of solid growth despite the huge turn down in oil pricing.
The company operates in the oilfield service markets through three groups. The Reservoir Characterization Group consists of the principal technologies involved in finding and defining hydrocarbon resources. The Drilling Group consists of the principal technologies involved in the drilling and positioning of oil and gas wells, and the Production Group consists of the principal technologies involved in the lifetime production of oil and gas reservoirs.
Schlumberger is the world’s largest provider of services and equipment used in drilling, evaluation, completion, production and maintenance of oil and natural gas wells. Revenues in 2016 totaled $27.8 billion, and the company posted EBITDA of a massive $6.5 billion.
Halliburton shareholders receive a 1.47% dividend. The Deutsche Bank price target on the stock is $66. The Wall Street consensus target is $63.23, and its shares closed Monday at $48.84.
Investors in Schlumberger are paid a solid 2.56% dividend. The Deutsche Bank has a $100 price objective, while the consensus target is $96.06. The stock ended trading on Monday at $78.24 a share.
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