Long term investors are picking through energy stocks in the wake of the sickening drop in oil prices that has rendered most of them extremely cheap and worth every penny of investment. During an interview on Fox Business, Hodges Capital Management research analyst, Michael Breard, reiterated that demand for oil in the coming months should increase consequently, positively affect energy stocks. Some of the energy stocks, that should offer a solid buying opportunities according to the analyst include Weatherford International Plc (NYSE:WFT) and Transocean LTD (NYSE:RIG).
Weatherford International Plc (NYSE:WFT) and Transocean LTD (NYSE:RIG) have mostly been affected by the fact that forces of demand and supply with regards to oil supply has not been met something that Breard expects to be achieved and have an impact on the stocks. Saudi Arabia is already doing all it can to regulate supply in the market something that is expected to have an impact on oil prices.
“I think these oil stocks are fairly close, I think they are going to bottom out in January February or March who knows? If you look long term just a couple of numbers in the U.S we have 800 cars per a thousand people, in Europe 500 per a thousand in China it is only 70 per a thousand. So demand for fuel around the world will be increasing, and supply will drop temporary while the projects are low, and supply and demand will come back and balance,” said Mr. Breard.
Transocean LTD (NYSE:RIG) registered a substantial loss in 2014 as oil prices started trading on the downward trend with Weatherford International Plc (NYSE:WFT) also filling the full effects of the sickening drop in oil prices. With Saudi Arabia doing all it can to regulate supply DLS Capital Managing Partner, David Steinberg, believes oil prices should start soaring in the coming months.
Steinberg maintains that energy stocks led by Weatherford International Plc (NYSE:WFT) and Transocean LTD (NYSE:RIG) should rebound sooner than later as they own big assets that are never severely affected by a drop in oil prices.
“These are really hard assets and the oil service companies in general equally court closely the prices of oil. They go for big discounts they are both buying their tangible assets. Actually their revenues do drop but they don’t quite drop severely in general as the price of oil does. So there is always an overshot, they are quick to adjust their sway of rigs as well as their contracts I think they hit upfront, and they rebound,” said Mr. Steinberg.
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