Top Stock Market Trades

Oilfield Service Stocks Continue to Achieve Record Profitability and Continue to be Some of Our Top Stock Market Trades

The major oil and gas investment banks are forecasting that the oil and gas producers will have similar capital budgets to what they had in 2011. This results in a very positive outlook for the oil and gas services company stocks as oil and gas service companies are trading at a significant discount within the various stock markets. The median debt to cash flow ratio for oilfield service stocks is around 0.9x where as the intermediate and junior producer stocks are forecast to be around 2 times debt to cash flow. We continue to see step declines on production from the producers and producers will continue to have to expend significant capital with the oilfield service stocks in order to keep production flat. Utilization rates for the oilfield service companies will remain high particularly for the oilfield service companies who are operating in resource plays. Oilfield Service Company stocks continue to trade around 3 times cash flow on an enterprise value to cash flow basis which makes them extremely attractive. CanElson Drilling trades at one of the lowest discounts at roughly 2.8 time EV/cash flow and is one of our top stock buys. They have a margin for approximately 40% on their drilling rigs and have no current debt which makes them extremely attractive as the risk of them going back to the market for a financing is extremely low. Another one of our top oilfield service stock market picks is Flint Energy services as they also trade at only 3 times EV/ cash flow and recently announced a $20 million oil sands fabrication contract for a major oil sands producer. The backlog of work as of Q3 2011 in the Facility Infrastructure segment was reported at $740 million in the Company's third quarter earnings release. For our Canadian investors, both these are great stock buys for your RRSP or TFSA.