Monday, 24 February 2014

Explore oil services for attractive value and momentum

Oil services coming back into vogue

As a contrarian value investor by nature, I like to look at sectors that have under-performed and which look to offer long-term value. If we look at the performance of the various S&P 500 sectors since the beginning of this year, the Oil & Gas sector stands out as one of the worst performers, with the iShares US Energy ETF falling from $50.50 at end-December 2013 to $46.40 by the beginning of February.

Since then, however, the Oil & Gas sector has staged somewhat of a recovery – still, over the last three months, the iShares Oil Equipment & Services ETF has lagged the S&P 500 by 4% (Figure 1).

However, in the long-term, I still see the Oil Equipment & Services sub sector remains an excellent way to take a “picks and shovels” approach to investing in the US shale oil & gas theme. The crude oil price has, if anything, moved higher over this period, judging by the Brent Crude Oil ETF (BNO; Figure 2).

To read the rest of this article and see my 3 favoured European stock picks to ride this Oil Services recovery, please click on the Mindful Money article link below:

All the best for the week ahead,

1 comment:

  1. I agree with you since last three months the prices is going to improve in both the Oil and Natural gas sector.