Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Basic Energy Services (NYS: BAS) have popped 11% today after receiving an upgrade, while the market anticipates increased demand due to drilling in Angola.
So what:Dahlman Rose upgraded shares to a buy rating yesterday but the big drivers came today. Oil is up 3.6% in trading, driving oil industry service competitors like Key Energy Services (NYS: KEG) , Nabors Industries (NYS: NBR) , and Halliburton (NYS: HAL) all significantly higher today. There may be some bounce from contracts awarded in Angola today as well, which should expand ultra-deepwater offshore drilling significantly.
Now what: Service providers are indirectly dependent on high oil prices to boost business, so the pop on a rally in oil isn't a big surprise. Oil has been all over the place lately, so I would prefer to buy shares of Basic Energy Services when it's reaching lows. In the long term, I think oil will continue to rise, but I'm not seeing today's bounce as a buying opportunity right now.
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At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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