The oil and gas machinery and equipment industry has been rising up the ranks this year in terms of aggregate price.
While two very small stocks, Geospace Technologies Corp. (NASDAQ: GEOS) and Profire Energy Inc. (NASDAQ: PFIE) are the industry’s price leaders, stocks drawing more institutional investment include S&P 500 component Baker Hughes Co. (NASDAQ: BKR), as well as mid-caps TechnipFMC plc (NYSE: FTI) and NOV Inc. (NYSE: NOV).
Baker Hughes, TechnipFMC and NOV are all institutional quality stocks with that golden combination of strong earnings estimates and chart performance. All these good watch list contenders, as analysts see these companies growing earnings by double- or triple-digit rates.
These stocks are all showing strength, as energy has been the leading sector in the past three months.
Baker Hughes is the only oil and gas equipment company in the S&P 500, although oil services companies like Schlumberger Ltd. (NYSE: SLB) and Halliburton Co. (NYSE: HAL) are among the top-weighted stocks in the index.
Baker Hughes is a global oilfield service company that provides technology, equipment, and services to the energy industry. Its customers hail from the oil and gas exploration, production, and refining parts of the industry. Baker Hughes is known for its weekly rig count, a report that tracks the number of active drilling rigs in the U.S., Canada and internationally.
The company’s stock is up 9.97% in the past three months and 19% year-to-date. The Baker Hughes chart shows a decline that began in early September. The stock is trading 3.6% below its 50-day moving average and 9.6% above its 200-day line. Those levels suggest that there’s been some profit-taking after a good run-up rather than a stampede for the exits.
Baker Hughes’ analyst ratings show a consensus view of “moderate buy” with a price target of $38.89, an upside of 12.72%. Wall Street is expecting earnings growth of 68% this year and 32% next year.
The company forecasts substantial growth from liquefied natural gas (LNG) contracts as demand for that fuel grows and more LNG terminals are being built around the globe.
U.K.-based TechnipFMC specializes in subsea, onshore, offshore, and surface projects. It works in the areas of engineering, procurement, construction, and installation, as well as offering advanced technologies for energy-industry customers.
At a recent energy industry conference, the company said more than 90% of its inbound orders and revenue originate outside the North American land market.
In its second-quarter report in late July, the company revised its outlook for subsea orders higher; it now expects those to come in at $9 billion. Revenue for both subsea and surface technologies has been increasing.
In the quarter, revenue increased by 15%. In the past four quarters, revenue grew at double-digit rates, which you can track using MarketBeat’s TechnipFMC earnings data.
The TechnipFMC chart will show you a bullish pullback to the 50-day moving average after the stock rallied to a September 12 high of $21.67. As long as it holds above that line, it’s actionable while it’s trading in the area between the 50-day average and the previous price high.
MarketBeat’s TechnipFMC analyst ratings show a “moderate buy.”
Mid-cap NOV specializes in designing, manufacturing, and servicing drilling and production equipment for the global oil and gas industry.
When the company reported second-quarter results in July, revenue increased by 21% to $2.093 billion, while earnings increased by 117% to 39 cents a share. You can track the company’s recent sales and net income growth using MarketBeat’s NOV earnings page.
The company credited rising demand in offshore and international land markets for the growth, despite economic uncertainty and continued declines in North American rig activity.”
It also said a substantial backlog of oil and gas development projects across offshore and international land markets “will continue to push oilfield service asset utilization higher, prompting continued demand for NOV’s critical equipment and technologies.”
Like all oil and gas equipment makers, demand for NOV’s products and services depends heavily on activity in the broader industry worldwide.
The NOV chart shows a cup-with-handle base that’s been forming since late January, with a buy point above $21.91.
The NOV analyst ratings show a view of “hold” on the stock, with a price target of $24.20, an upside of 17.99%. Analysts expect earnings to grow by 273% this year, to $1.46 a share. Next year, that’s seen rising by another 20% to $1.74 per share.