Two Votes for Oil States

10/07/2005 12:00 am EST

Focus:

Michael Burnick

Editor, Real Wealth Report

Two leading advisors have turned to Oil States, a leading player in oilfield services in the Gulf. Here, Mike Burnick, editor of the premium trading service, Elite Stock Trader, and Richard Moroney, editor of the top-performing Upside, offers their reviews.

"Oil States International (OIS NYSE), based in Houston, is well-positioned to win a lot of new business to help repair the battered Gulf Coast oil industry," notes Mike Burnick, editor of Elite Stock Trader. Sales are going gang-busters, rising 62% during the first half. With the fundamentals behind oil still strong, these numbers have every reason to remain robust going forward. Profits are rising at a fast-pace, too.  Oil States has a long-term record of excellent profitability, delivering 130% compound annual earnings per share growth over the past five years, compared to just 23.6% for the oil services industry on average.

"Overall, Oil States is an efficient, highly profitable, well-run company. Its services have been in high demand all year thanks to rising energy prices, which has spurred more drilling activity. Now, Oil States should be busier than ever providing the expertise and equipment needed to get America's weather-beaten offshore oil industry back up and running. The stock looks like a bargain. Oil States' strong fundamentals make a great case for big upside potential."

"With niche acquisitions complementing attractive positions in fast-growing markets, Oil States International is outperforming its oilfield peers," adds Richard Moroney, editor of Upside. "Per-share earnings surged 74% on a 62% sales gain in the first half of 2005. Robust growth should continue over the next 12 to 18 months, even if oil and natural gas prices decline significantly. The stock, a Best Buy, earns an impressive Overall Quadrix score of 97, reflecting high marks for operating momentum, earnings-estimate trends, and share-price performance.

"Since going public in 2001, Oil States has grown largely through acquisitions. The company continued its string of strategic purchases in the most recent quarter, making three deals to capitalize on growth opportunities. Oil States has a successful track record of integrating acquisitions and is likely to pursue more niche deals. The stock trades at 15 times estimated year-ahead earnings, a premium to its five-year forward p/e of 11 but a discount to its peer-group average."

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