Drilling Stocks Continue To Outperform (BP, HAL, PDE, FTI, PTEN, CRR, HERO, DVR, GIFI, RIG, DO, NE, HAWK, GLBL)
Barclays upgraded the oil service and drilling sector to Positive from Neutral on Tuesday, noting that the group’s -26% decline more than compensates for the impact of the BP (BP) oil spill. Stocks erased early gains throughout yesterday’s session, but components of the Oil Services and Equipment Stocks Index are up across the board on Wednesday.
Halliburton (HAL), Pride International (PDE), and FMC Technologies (FTI) were among winners during yesterday’s session after Barclays upgraded the stocks to Overweight from Equal Weight. All three are extending gains by more than 3% in today’s session. Meanwhile, Patterson-UTI Energy (PTEN) and Carbo Ceramics (CRR), which Barclays boosted to Equal Weight from Underweight are also adding to their upgrade rallies.
As a whole, the Offshore Drilling Stocks Index has outperformed the S&P 500 by 5.5% over the past month. Today, Hercules Offshore (HERO), Cal Dive International (DVR), and Gulf Island Fabrication (GIFI) are leading the sector higher with gains of more than 4%.
Large-cap drillers Transocean (RIG), Diamond Offshore Drilling (DO), and Noble (NE) are all trading 15% or more from their respective 52-week lows, but all three are at least -30% from 52-week highs. Elsewhere in the sector, Seahawk Drilling (HAWK), Hercules, and Global Industries (GLBL) are all more than -60% from their one-year highs.
The drilling sector should be interesting to watch in the second half, particularly those stocks with exposure to the offshore segment. Investors can track the Offshore Drilling Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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