Falling oil prices have sent the shares of this energy fund and ETF to discounted levels.
Fidelity Select Energy Services (FSESX) and iShares US Oil Equipment & Services (IEZ)
from AlphaProfit Sector Investors’ Newsletter
The price of oil fell 11% in October as Saudi Arabia lowered prices on its exports in a bid to maintain market share amidst growing U. S. production and tepid demand from Europe & China. Weighed by fears of an oil price war, preferred energy services investments lost nearly 9% on average although 84% of service providers beat analysts’ third quarter EPS forecasts with a median surprise of 6.1%.
Industry heavyweights remain sanguine on prospects. Schlumberger expects global oil & gas spending to rise in 2015 due to higher product demand while Baker Hughes expects international rig activity to grow 8% in 2014. Confident of its future, Halliburton has upped its quarterly dividend by 20%. Energy services shares have near-term rebound potential. We rate Fidelity Select Energy Services (FSESX) and iShares US Oil Equipment & Services (IEZ) Favored Buy.
Sam Subramanian, PhD, AlphaProfit Sector Investors’ Newsletter, www.alphaprofit.com, 281-565-6963, November 2014