Wednesday, May 7, 2008


with oil prices hovering over $120 a barrel, are energy stocks peaking? i doubt it. in fact, the oil sector's price-earnings ratio since the end of 2000 has dropped by 50% despite a 390% leap in earnings. over the same period, the p-e for the S&P 500 (excluding energy) fell just 10%. this indicates the market doesn't believe energy companies can keep up their strong profit growth. but it also means, in my opinion, that oil stocks are still a bargain. nbr, the world's largest land oil driller, which operates in north america, africa, latin america and the middle east. it trades for under 40 currently; i think it could touch 75 in 18 months.

long nbr

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