Oil and Gas Drilling is the smaller of the two ?industries I am highlighting today, with 18 firms. That is still a well above average size for an industry. It is currently in 25th place, an improvement of 16 spots from last week, with an average rank of 2.56, down from 2.61 last week.
The oil and Gas Service industry is much larger, not only in terms of the number of firms (34) but also in the market capitalizations of the firms involved. It is currently in 31st place, and improved three spots on an unchanged average Zacks Rank of 2.59. Significantly, the largest firms in the industry hold either #1 or #2 ranks.
All told, or the 52 firms in these industries, 11 (21.2%) of them hold the enviable Zacks #1 Rank, and an additional 9 (17.3%) have Zacks #2 Ranks. If the Zacks ranks were random, then one would expect that 5% of the names in an industry would be #1s and 15% would be #2s.
There are three genuine large caps on the lists. Halliburton (HAL) tops the list of Zacks #1 Ranked firms, While Schlumberger (SLB) and Baker Hughes (BHI) top the list of Zacks #2 Ranked firms. The rest are all on the small side of mid cap, ranging down to firms bordering on micro-cap size.
Valuations, particularly if you look out to 2012 earnings are downright compelling. Every one of the number ones has a single-digit P/E based on 2012 earnings. The estimate increases for 2012 earnings are mostly even bigger than those for 2011 earnings.
The combination of rapidly rising expectations, low valuations and a very solid long-term thesis as to why these industries should have a very bright future for a very long time to come could well result in a gusher for your portfolio.
GLTA
SSN Price at posting:
11.0¢ Sentiment: LT Buy Disclosure: Held
