February Idea of the Month — Oil Services

by Travis Johnson, Stock Gumshoe | February 28, 2014 9:52 pm

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Source URL: https://www.stockgumshoe.com/2014/02/february-idea-of-the-month-oil-services/


16 responses to “February Idea of the Month — Oil Services”

  1. wrightpj says:

    Thanks for the updated Irregulars Core, Speculations and Watchlist lists. One thing though – you say “I feel a lot better about NOV or Apple (AAPL) or Berkshire Hathaway (BRK-B) or even our favorite REITs (like COR, MPW and ROIC). ” Have you considered putting MPW into one of these categories? It seems like as ‘solid’ a stock as ROIC and COR.

  2. arch1 says:

    Travis As to soapbox I thank you and agree. Belief is no guarantee of investment success. We avoid making mistakes thru our experience. We gain experience by making mistakes.

  3. herbalix says:

    Thanks Travis! Like your idea of the month NOV and will add on my ‘watch-list’. Also have been very happy and successful with SDRL. Noticed a certain pattern. SDRL seems to move between the lower 30’s to mid 40’s. I have been able to go in and out of it around those areas a few times. Recently bought in again around $34-35 and will be closely watching how SDRL hopefully moves up again. Of course, this makes only sense when you are using an IRA account.

  4. sportsbiz says:

    Travis,
    Thanks for the write-up and voice of support for NOV. I bought it about a month ago only to see it promptly drop about 10%. Not enough to get too worried but as everything around us went up, it kind of hung there. Support for the stock came out in Barron’s, a couple of brokers and a couple of newsletters so it’s beginning to look like there’s a party starting.

  5. jpbel2003 says:

    another highly speculative compliment to nov is mdr that is going to be at rock bottom
    after a dicey cc today.

  6. arch1 says:

    Travis as something a little different what do you think of TRP as an LNG pipeline play for keystone & BC,Prince Rupert combo?

  7. peterk says:

    I appreciate this article much, because NOV is on my watchlist.
    But recently I have some doubts about the future of the ‘Big Oil Industry’ Why?
    1. The trend of super light cars (BMW Carbon Fiber!) = light cars consuming less fuel
    2. Alternative energies
    3. Machines of any kind which are consuming less energy.
    etc…
    To get me right I don’t exspect the the big oil companies will disappear but will there be any more growth in the future for them?
    One good example we have in Germany.
    RWE was the biggest energy supply company in the country.
    Yesterday they have reported the first loss in the companies history.
    The stock and the bonds of the company have been safe in the past like government bonds.
    In the last 2 years the stock price has halved and the bond always rated with A are now BBB+
    Any comments maybe I am wrong

  8. FYI, speaking of Bitcoin, Alex Daley over at Casey published a nice piece on his opinion of Bitcoin — I found myself agreeing with much of what he said, though as I noted above I have pretty much gotten entirely out of bitcoin now because I can’t see a level that represents any fundamental value, or a reason for putting this money at risk.

    Here’s his piece: http://www.caseyresearch.com/cdd/bitcoins-uncomfortable-similarity-to-some-shady-episodes-in-financial-histo

  9. lscherrer says:

    Thanks for the NOV suggestion, Travis, I’ve been thinking about getting back into it.

    I’m sure you don’t need more energy ideas to sift through, but, what the heck, I’ll throw them out there anyway. I’m a multi-year holder of Energy Recovery (ERII) and Lightbridge (LTBR) and both have pulled back from recent tears.

    ERII just had their conference call and had their best quarter ever. They own 90% of the energy recovery market for salt water reverse osmosis (SWRO) desalination. Desalination megaprojects, which had faltered with the world economy, are coming back and long-term prospects are bright. The money Energy Recovery put into the materials science of making their own high-tech ceramics is now paying off with higher margins for their devices. What’s most exciting, though, is that they have made their first sales into the oil and gas market, where high pressure refining techniques are standard and their devices can save millions in energy costs.

    I’d encourage anybody to read the CC transcript (http://seekingalpha.com/article/2072573-energy-recoverys-ceo-discusses-q4-2013-results-earnings-call-transcript). ERII has pulled back after a 40% post-earnings rise on very high volume. One broker downgraded the company because of concerns about ERI’s refusal to provide quarterly earnings guidance. I plan to buy more with any further correction.

    I wrote about Lightbridge a few years ago for your silver dollar contest (http://www.stockgumshoe.com/2011/12/microblog-a-nuclear-power-uprate-for-your-portfolio/). They make an all-metal uranium fuel rod as a drop-in replacement for standard Western pressurized water reactors that has two major advantages over current uranium oxide pellet rods. First, the reactor can operate at more than 1000ÂșC cooler temperature because of more efficient energy transfer to coolant (metal conducts heat better than ceramic). The increased safety margin is significant. A Lightbridge fuel assembly (probably) would not melt-down in a Fukushima-style loss-of-coolant accident and would not heat up enough to cause the zirconium cladding-induced pyrolytic reduction of water to explosive hydrogen gas. Second, because of the increased efficiency, reactors can produce up to 30% more energy from the same reactor (new-build; 15% increase in existing reactors).

    LTBR shares have doubled this year on consistently higher volume. I suspect they will pull back as there are no clear, immediate catalysts and full-scale testing in a commercial PWR is still about three years away.

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