In this article, we will be taking a look at the 10 best oilfield services stocks to buy now.
Brent crude oil prices have dropped below $80 per barrel from more than $90/bbl in April because of reduced demand for oil, growing worldwide stockpiles, and a decrease in geopolitical risks. In the first half of the year, prices were extremely volatile owing to rising geopolitical tensions, reductions in production by OPEC+ members, and indications of strengthening worldwide industrial production.
Global oil demand is decelerating, mirroring difficulties in the worldwide economic landscape, especially the reduction in China’s economic expansion. Amid the deceleration, oil prices finding support above the $70 barrel should be a boon for the oilfield service sector, which is highly dependent on oil and gas prices.
The oilfield and service sector is made up of companies that offer assistance to companies involved in the exploration and production of oil and gas. Consequently, the best oilfield services stocks to buy are of companies that assist in the production, repair, and upkeep of wells and drilling machinery. The companies receive multibillion-dollar contracts from integrated energy firms and independent and national oil and gas companies.
READ ALSO: Salesforce Inc (CRM) Faces Activist Pressure By ValueAct Capital and 15 Most Feared Activist Hedge Funds.
When crude oil prices rise and remain well above the $70 barrel level, upstream companies’ ramp up spending on exploration and drilling activities, benefiting oilfield services companies. Increased spending translates to improved revenues and profit margins.
With oil prices finding support above the $70 per barrel level, the oilfield services sector should grow at a compound annual growth rate of 5.83% from $119 billion as of 2024. The robust growth is attributed to rising expectations of increased development of gas reserves and advanced technology.
While oil prices averaged $77 a barrel in 2023, persistently high inflation above 4% was one of the reasons that the oilfield services remained under pressure. That’s because upstream companies refrained from pursuing mega exploration and development projects.
Consequently, the overall oilfield service sector had a one-year return of −11.8%, underperforming the S&P 500, which was up by about 26%. The sector is down by about 3.87% for the year, underperforming the S&P 500, which is up by about 17%.
While the underperformance is a concern, it provides an ideal entry-level for the best oilfield services stocks to buy now, as most appear to be trading at a discounted valuation.
The global upstream industry is expected to maintain its hydrocarbon investment at about $580 billion in 2024, representing an 11% year-over-year increase. Likewise, the expected investments should make the case for investors to pay close watch to the best oilfield services stocks to buy now, trading at discounted valuations.
The second quarter showed growing momentum across different verticals in the oilfield services sector amid a slowdown in U.S. activity.
“The four major oilfield service companies are well-positioned to benefit from the multi-year global upcycle in E&P spending and the increasing demand for energy services and technology,” Evercore analyst James West wrote. “Strong earnings growth and margin expansion are being driven by international and offshore markets.”
Our Methodology
We used Yahoo Finance’s Screener to compile the list of the best oilfield services stocks to buy now. We scanned for the most significant oil & gas equipment & services companies and those with a substantial upside potential based on analysts’ average price targets. Once we had a consolidated list, we selected and ranked the stocks based on their upside potential.
We also mentioned the number of hedge funds that had bought these stocks during the same filing period. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Best Oilfield Services Stocks to Buy Now
10. NOV Inc. (NYSE:NOV)
Hedge Funds Holding Stakes: 29
Stock Upside Potential as of 12/08/2024: 31.65%
NOV Inc. (NYSE:NOV) is an oilfield services company that designs, manufactures, and sells system components and products used in oil and gas drilling and production. It also provides solids control and waste management equipment and services, managed pressure drilling, drilling fluids, premium drill pipe,
NOV Inc. (NYSE:NOV) announced solid results for the second quarter of 2024, with profits and sales exceeding what analysts predicted. The firm’s earnings per share (EPS) stood at $0.57, marking a notable increase from the analyst’s prediction of $0.34. Additionally, sales surpassed expectations, hitting $2.22 billion instead of the projected $2.19 billion.
The increasing use of Nova’s latest innovations and the expansion of its market presence are fueling robust expansion globally, while the reduction in operations in North America is being balanced by this growth.
According to chief executive officer Clay Williams, high demand for the company’s technologies pushed the backlog to its highest level since 2015 with margins of projected backlog expected to improve in the second quarter.
While NOV Inc. (NYSE:NOV) is down by 15% for the year, it stands out as one of the best oilfield services stocks to buy, given its 1.25% dividend yield. It commands a consensus Buy rating with a $23.50 price target, implying a 31.65% upside potential from current levels. 29 out of 920 hedge funds tracked by Insider Monkey held stakes in the company as of the end of Q2 2024.
9. Halliburton Company (NYSE:HAL)
Hedge Funds Holding Stakes: 41
Stock Upside Potential as of 12/08/2024: 43.10%
Halliburton Company (NYSE:HAL) is an oil and gas equipment Service Company offering production enhancement services, including stimulation and sand control. Its Drilling and Evaluation segment provides drilling fluid systems, performance additives, completion fluids, and solids control.
All the major petroleum companies are customers of Halliburton Company (NYSE:HAL), including Gazprom JSC, NC Gazprom Neft JSC, LUKOIL JSC, NC Rosneft JSC, Exxon Mobil Corporation (NYSE:XOM), Shell Plc (NYSE:SHEL), TotalEnergies SE (NYSE:TTE), and others.
While the stock is down by about 13% for the year, it boasts significant upside potential given the strong demand for its services, with oil prices well supported above the $70 a barrel level. With demand for high-quality services and equipment expected to be tight in the oil field services, Halliburton Company (NYSE:HAL) should be able to increase average revenue per rig.
The stock has been up by about 75% over the past three years, outperforming the 45% gain for the S&P 500. It is also one of the best oilfield services stocks to buy now, given that Halliburton Company (NYSE:HAL) rewards investors with a 2.18% dividend yield and trades at a price-to-earnings multiple of 9.
Wall Street analysts rate Halliburton Company (NYSE:HAL) as a Buy with a $44.36 price target implying 43.10% upside potential. As of the end of the second quarter, 41 hedge funds tracked by Insider Monkey held stakes in the company.
Here is what Carillon Eagle Mid Cap Growth Fund said about Halliburton Company (NYSE:HAL) in its fourth quarter 2023 investor letter:
“Halliburton Company (NYSE:HAL) provides equipment and services to the global energy industry. The company’s shares underperformed during the quarter, largely due to downward pressure on crude oil and natural gas prices. Despite this recent move, ongoing discipline among North American shale producers could continue supporting relatively healthy activity growth at current commodity price levels, which should provide stability to service providers such as Haliburton. The company is also poised to benefit from the ongoing, multi-year international and offshore upstream investment cycle that is less dependent on short-term swings in commodity prices.”
8. Weatherford International plc (NASDAQ:WFRD)
Hedge Funds Holding Stakes: 41
Stock Upside Potential as of 12/08/2024: 44.65%
Weatherford International plc (NASDAQ:WFRD) is an oilfield company specializing in energy services and machinery supplies for the exploration, extraction, and intervention of oil and natural gas wells across the globe. It also provides directional drilling services and logging and measurement services during drilling operations; services related to rotary steerable systems are also offered.
Weatherford International plc (NASDAQ:WFRD) delivered a 10% year-over-year increase in Q2 revenue that totaled $1.41 billion as net income increased 31% year over year to $264 million, affirming why it is one of the ten best oilfield stocks to buy now.
The second half of the year’s adjusted free cash flow is anticipated to be significantly more significant than the first, confirming our forecast of an adjusted free cash flow exceeding $500 million for the year.
These forecasts align with the ongoing robustness in international and offshore operations, led by the Middle East/North Africa/Asia region, which showed 9% growth from one period to the subsequent and 29% growth compared to the same period last year in the second quarter. It currently pays a 0.94% dividend yield.
Weatherford International plc (NASDAQ:WFRD) commands a consensus Buy rating on Wall Street with a $156.67 price target implying 44.65% upside potential from current levels. The number of hedge funds holding stakes in the company stood at 41 as of the end of the second quarter compared to 38 as of the end of the first quarter.
Here is what Yacktman Asset Management said about Weatherford International plc (NASDAQ:WFRD) in its Q3 2022 investor letter:
“Weatherford International plc (NASDAQ:WFRD) shares rallied due to solid revenue growth and margin expansion. After many years of restructuring, the company’s results are improving significantly, which we think offers continued upside to the shares.”
7. Valaris Limited (NYSE:VAL)
Hedge Funds Holding Stakes: 39
Stock Upside Potential as of 12/08/2024: 45.22%
Valaris Limited (NYSE:VAL) is an oilfield company that provides offshore contract drilling services. It owns an offshore drilling rig fleet that includes drill ships and dynamically positioned semi-submersible rigs. It is a company that contains fire from all angles regarding operational efficiency. It operates a fleet of 52 rigs, including 36 offshore jackup rigs, 11 drillships, and 5 semi-submersible platform drilling rigs.
The company’s financial health is also noteworthy. Valaris Limited (NYSE:VAL) ‘s revenue efficiency in Q2 stood at 99%, with revenues increasing to $610 million from $525 million a year ago. Net income quadrupled to $26 million from $151 million a year ago. The company continues to record booming business, securing a $500 million contract backlog with Equinor offshore Brazil.
While Valaris Limited (NYSE:VAL) is down by about 4%, it trades at a discount. Analysts on Wall Street rate the stock as a Buy with a $94 price target, implying a 45.22% upside potential from current levels.
39 out of 920 hedge funds tracked by Insider Monkey held stakes in Valaris Limited (NYSE:VAL) as of the end of Q2 2024.
In its Q2 2024 investor letter, Praetorian Capital shared insights on Valaris Limited (NYSE:VAL):
“Valaris Limited (NYSE:VAL) has been range bound for over two years now, awaiting the signing of new contracts at current market rates, that will replace expiring contracts that are frequently less than half of current prevailing rates. There have been some questions as to why the company has been slow to sign new contracts. However, I believe that management is trying to trade a slightly reduced price for increased duration of contract tenure, and that’s the reason for a lack of commentary on new contracts. Should the company announce new contracts at anywhere near current market rates, I believe that the shares will respond in a rather dramatic way—especially as Valaris is by far the cheapest of the large drilling companies (based on the enterprise value per rig metric), despite having one of the best fleets and strongest balance sheets. Between our common and warrant position, Valaris was our 2nd largest position at the end of June.”
6. Natural Gas Services Group, Inc. (NYSE:NGS)
Hedge Funds Holding Stakes: 10
Stock Upside Potential as of 12/08/2024: 45.45%
Natural Gas Services Group, Inc. (NYSE:NGS) is an oilfield services company that offers natural gas compression equipment and services to the more significant energy industry in the US. It fabricates and sells natural gas compressors for oil and gas production while providing aftermarket services.
In the first quarter, Natural Gas Services Group, Inc. (NYSE:NGS) delivered a 48% increase in rental revenue that totaled $33.7 million, and net income tripled to $5.1 million or $0.41 per basic share.
Rental fleet utilization is a key factor in assessing Natural Gas Services Group, Inc. (NYSE:NGS) ‘s success. This figure shows the efficiency with which the company uses its rental compressor assets to generate revenue.
It reached highs of 80.8% last year affirming the company’s ability to generate optimum revenues from its assets. Upon examining the company’s revenue growth over the past year, it’s clear that the company experienced an impressive surge of 44%.
This solid recent trend also enabled Natural Gas Services Group, Inc. (NYSE:NGS) to boost its total revenue by 92% over the previous three years. Looking ahead, revenue is expected to increase by 18% in the upcoming year.
Given that the industry is anticipated to only see a growth of 9.5%, Natural Gas Services Group, Inc. (NYSE:NGS) is in a favorable position to achieve a more robust revenue outcome.
The stock commands a consensus Buy rating on Wall Street with a $28 price target, implying a 45.45% upside potential from current levels. Natural Gas Services Group, Inc. (NYSE:NGS) is up by about 26% for the year. 10 out of 920 hedge funds tracked by Insider Monkey held stakes in the company as of the end of Q2 2024.
Here is what Palm Valley Capital Management stated the following regarding Natural Gas Services Group, Inc. (NYSE:NGS):
“The only position negatively impacting full year 2023 returns by at least 10 basis points was Natural Gas Services Group, Inc. (NYSE:NGS). We sold NGS earlier in the year after management laid out a growth plan that included meaningful new borrowings. This violated our internal policy of not holding companies with significant operating and financial risk.”
5. Schlumberger Limited. (NYSE:SLB)
Hedge Funds Holding Stakes: 67
Stock Upside Potential as of 12/08/2024: 51.55%
Given its role in providing oil and gas equipment and services, Schlumberger Limited (NYSE:SLB) is one of the best oilfield services stocks to buy now. With a market cap of about $65 billion, it is one of the most prominent players specializing in providing field development and hydrocarbon production. It also offers oil field services, including drilling, completion, and production solutions to upstream oil & gas companies in the U.S.
While Schlumberger Limited (NYSE:SLB) is down by about 17% for the year, it has rallied by more than 120% since 2021, outperforming the 45% gain of the S&P 500. It also rewards investors with a 2.52% dividend yield, which is ideal for generating passive income.
The fact that Schlumberger Limited (NYSE:SLB) has consistently beaten the S&P 500 affirms why it is one of the best oilfield service stocks to buy now. Its international and offshore segments outperform due to long-cycle development and capacity expansion projects. Oil supply cuts amid high demand should build a more supportive environment for higher oil prices, supporting the company’s prospects in the sector.
As of the end of the second quarter, 67 hedge funds tracked by Insider Monkey Database held stakes in the company. Schlumberger Limited (NYSE:SLB) is currently rated as a Buy with a $66 consensus price target, implying 51.55% upside potential from current levels.
In its fourth quarter 2023 investor letter, Artisan Value Fund said the following about Schlumberger Limited (NYSE:SLB):
“On the downside in Q4, our two energy holdings, Schlumberger Limited (NYSE:SLB), the world’s largest oil services company, and EOG Resources, a US shale-focused E&P company, were weak along with the broader sector. We have stringent criteria for business quality, which is particularly important in commodities sectors as these businesses do not control the underlying commodity prices, which can be volatile. We expect Schlumberger to continue to successfully navigate market volatility and deliver on its free cash flow and profit margin growth objectives from combination of activity growth and pricing gains. The stock has been among our top contributors since we initiated our position in December 2020.”
4. Newpark Resources Inc (NYSE:NR)
Hedge Funds Holding Stakes: 24
Stock Upside Potential as of 12/08/2024: 54.36%
Newpark Resources Inc (NYSE:NR) is one of the key players in the oilfield and service sector, which is focused on providing product rentals and services to the oil and natural gas exploration and production industries. Its Fluid Systems segment provides customers with drilling completion and related technical services.
Newpark Resources Inc (NYSE:NR) delivered solid second-quarter results, whereby Industrial Solution segment revenue increased 40% on an organic basis, totaling $179 million. Operating net income more than doubled to $13.3 million from $5.9 million a year ago.
The growth in Industrial Solutions’ income was fueled by the growth of its fleet and a persistent move by customers from traditional, wood-based mats to our DURA-BASE composite matting system. Sales of products hit a record high in the second quarter, and rental income saw a 9% rise compared to the same period last year.
Investment strategy remains focused on putting money into the rental vehicle fleet segment, returning profits through buying back our own shares, and seizing growth opportunities through both current and related worksite access markets. The business produced free cash flow of $22 million in the second quarter and saw its net leverage drop to 0.3 xs by June 30, 2024.
The stock is currently rated as a Buy with an average price target of $11.50, implying a 54.36% upside potential from current levels.
The number of hedge funds holding stakes in Newpark Resources Inc (NYSE:NR) stood at 24 out of 920, tracked by Insider Monkey as of the end of the second quarter.
3. ProFrac Holding Corp. (NASDAQ:ACDC)
Hedge Funds Holding Stakes: 14
Stock Upside Potential as of 12/08/2024: 58.93%
ProFrac Holding Corp. (NASDAQ:ACDC) is one of the best oilfield service stocks to buy now, and it operates as a technology-focused energy service company. It provides hydraulic fracturing well stimulation, additional completion services, and related products and services to upstream oil and natural gas firms. ProFrac Holding Corp. (NASDAQ:ACDC) also produces and distributes powerful pumps, valves, pipes, swivels, large-diameter manifold systems, and fluid additives.
The company delivered a disappointing second-quarter earnings report. Revenues in the quarter totaled $579.4 million, down from $581.5 million delivered a year ago. ProFrac Holding Corp. (NASDAQ:ACDC) also plunged into a net loss of $15.6 million compared to a net income of $3 million for the same quarter last year.
Despite challenges, ProFrac Holding Corp. (NASDAQ:ACDC) achieved record pump hours and efficiencies in Q2 while upgrading its fleet with electric and Tier 4 dual fuel systems. The company continues to receive high demand for these technologies, supported by its vertical integration. In the Stimulation Services segment, steady pricing and superior cost structure are expected to improve profitability, with 70% of active fleets now including e-fleet or natural gas-capable equipment.
Analysts on Wall Street rate the oilfield services company as a Buy with a $9.17 price target, implying a 58.93% upside potential from current levels. Based on the Insider Monkey database, the number of hedge funds with stakes in ProFrac Holding Corp. (NASDAQ:ACDC) dropped to 14 by the end of the second quarter of 2024, from 16 at the end of the first quarter.
2. DMC Global Inc. (NASDAQ:BOOM)
Hedge Funds Holding Stakes: 14
Stock Upside Potential as of 12/08/2024: 87.12%
DMC Global Inc. (NASDAQ:BOOM) is an oilfield services company that offers a range of specialized products and diverse solutions for the building, energy, manufacturing, and transportation sectors globally. The Arcadia division is involved in producing, assembling, and distributing architectural building materials. The DynaEnergetics division is responsible for creating, distributing, and selling perforating systems, including initiation systems, shaped charges, detonating cables, gun equipment, and control systems.
The company has shown resilience and adaptability, maintaining a strong market position across its diverse segments. In recent quarters, DMC Global has reported solid financial performance, driven by robust demand in energy and construction.
As one of the best oilfield service stocks to buy, DMC Global Inc. (NASDAQ:BOOM) delivered solid second-quarter results whereby revenue was up 9% year over year to $171.2 million, affirming strong demand for its services and tools in the sector. Net income totaled $6.3 million.
DMC Global Inc. (NASDAQ:BOOM)’s Arcadia business saw a sequential revenue increase, with improved operational efficiencies and cost reductions leading to its highest gross margin since its December 2021 acquisition.
While DMC Global Inc. (NASDAQ:BOOM) is down by 38%, analysts on Wall Street rate it as Buy with a $21.50 average price target implying 87.12% upside potential. On the other hand, 14 out of 920 hedge funds tracked by Insider Monkey held stakes in the company as of the end of Q2 2024.
1. Dril-Quip, Inc. (NYSE:DRQ)
Hedge Funds Holding Stakes: 14
Stock Upside Potential as of 12/08/2024: 113.83%
Headquartered in Houston, Texas, Dril-Quip, Inc. (NYSE:DRQ) is one of the best oilfield services stocks to buy now as it offers exposure to the design, manufacturing, and sale of engineered drilling and production equipment for offshore and onshore applications.
The firm’s primary offerings include subsea and above-ground wellheads, specialized connectors, and related pipes. Additionally, Dril-Quip, Inc. (NYSE:DRQ) offers technical support, services for rework and reconditioning, and the rental or purchase of tools for installing and retrieving its products; services for the installation.
Dril-Quip, Inc. (NYSE:DRQ) ‘s stock sentiments received a boost, delivering impressive second-quarter results whereby earnings more than doubled to 10 cents a share from 3 cents a share a year ago. Revenues totaled $120.3 million from $89.6 million a year ago.
Dril-Quip’s strategic initiatives include diversifying its business mix towards onshore operations and expanding its global presence. The proposed merger with Innovex Downhole Solutions is expected to deliver nearly $30 million in annual cost savings and additional revenue synergies, enhancing shareholder value.
While Dril-Quip, Inc. (NYSE:DRQ) is down by about 30% for the year, analysts remain upbeat about its long-term prospect, with a $30.50 price target implying a 113.83% upside potential from current levels. As of the end of the second quarter, 14 hedge funds out of 920 tracked by Insider Monkey held stakes in the company.
The best oilfield services stocks offer one of the best ways of diversifying an investment portfolio in the energy sector. However, given that the artificial intelligence arms race is just starting, under-the-radar AI stocks are trading at highly discounted valuations with more incredible promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than the top activist investment plays, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
