Schlumberger Limited. (SLB): Three Stocks for Big Gains in Big Energy

With a P/E ratio of only 11.9 times next year’s consensus earnings and an anticipated growth rate of 15% a year for the next five years, the stock price appears to have ample room to rise. At 1.26 times book value, Baker Hughes Incorporated (NYSE:BHI) also trades at less than half the valuation assigned to the other two companies discussed here.

As if any further incentive were needed to open a position in Baker Hughes Incorporated (NYSE:BHI), this stock would have to rise 84% from its current level to equal its 2007 high of over $90/share.

Final thoughts and actions

There is no question that the oil services industry will be with us as long as the world needs fossil fuels to provide for our energy needs. Best of all, these businesses all find themselves at the center of the new American shale oil boom, virtually ensuring continued growth and profits. These new energy fields are projected by some to catapult America to the top of the world’s oil-producing nations in the next five years . The only real question is how much longer these three three key businesses in this arena can remain this cheap.

Investors who act now could easily see 15% annual returns if these share prices only rise fast enough to keep pace with the projected earnings growth. If energy prices continue their recent trend higher, these stocks could explode. For big gains with reduced risk, buy all three.

Ken McGaha has no position in any stocks mentioned. The Motley Fool recommends Halliburton.

The article 3 Stocks for Big Gains in Big Energy originally appeared on Fool.com.

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