Energy Business

5 Solid Oil Services Stocks to Buy for Upside in 2018

U.S. Silica

This stock has been absolutely smoked but has awesome upside potential. U.S. Silica Holdings Inc. (NYSE: SLCA) is a leading producer of commercial silica used in the oil and gas industry and in a wide range of industrial applications. Over its 117-year history, it has developed core competencies in mining, processing, logistics and materials science that enable it to produce and cost-effectively deliver over 200 products to the firm’s customers across all end markets.

The company currently operates nine industrial sand production plants and eight oil and gas sand production plants. With the price of oil stabilizing, many of the short-sellers that targeted the frac sand companies may be starting to cover their positions. Toss in increased shale activity in 2018 and this could be a big winner.

Shareholders are paid a 0.75% distribution. The whopping $63 SunTrust price target compares with the $43.98 consensus target. The stock closed Thursday at $34.45.

Superior Energy Services

Superior Energy Services Inc. (NYSE: SPN) serves the drilling, completion and production-related needs of oil and gas companies worldwide through its brand name drilling products and its integrated completion and well intervention services and tools, supported by an engineering staff who plan and design solutions for customers.

The company is a favorite midcap stock to play the U.S. land services recovery, and analysts think investors should see the impact of cost reductions as this year ends and we head into 2018. Some feel that could help offset pricing pressure. The sector downturn in 2018 led to reductions in capex and capacity attrition, a positive for the survivors like Superior that have managed both extremely well in a very difficult environment.

The SunTrust price target is $13. The consensus target is $11.63, and shares closed Thursday at $8.73.

Weatherford

This company has been absolutely demolished from its 2014 highs, but it may be offering aggressive investors big upside potential. Weatherford International Ltd. (NYSE: WFT) is one of the largest multinational oilfield service companies, providing innovative solutions, technology and services to the oil and gas industry. It operates in over 100 countries and has a network of approximately 1,200 locations, including manufacturing, service, research and development, and training facilities and employs approximately 37,000 people.

The company offers customers a wide range of global capabilities, including a proprietary system for pressure management in the mushrooming arena of subsea production. The changes in government oil policy in Mexico in 2014 may provide some favorable tailwinds for the company, despite the huge downturn in oil pricing.

Weatherford entered into joint venture with Schlumberger back in March, which will own 70% and be the operator of the hydraulic fracturing partnership and is known as OneStim. Weatherford will own 30% and received a one-time cash payment of $535 million. This could prove a huge driver for the company in 2018, and some still feel that a buyout of the company is possible.

SunTrust has set its price target at $6. That compares with the consensus price objective of $5.50 and the most recent closing share price of $3.35.

These are five stocks to buy for big potential gains in 2018. They run the full risk gamut, so investors need to gauge their capital investment to their risk tolerance. One thing is certain, the sector offers far more value than many and makes sense to buy now.