Why iShares Dow Jones U.S. Oil Equipment Could Outperform in 2012


Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the iShares Dow Jones U.S. Oil Equipment & Services Index Fund (NYS: IEZ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at iShares Dow Jones U.S. Oil Equipment and see what CAPS investors are saying about the ETF right now.

iShares Dow Jones U.S. Oil Equipment facts


May 2006

Total Assets

$426 million

Investment Approach

Seeks results that correspond to the Dow Jones U.S. Select Oil Equipment & Services Index, which includes suppliers of equipment or services to oil fields and offshore platforms, such as drilling, exploration, engineering, logistics, seismic information, and platform construction.

Expense Ratio


Dividend Yield


1-Year / 3-Year / 5-Year Annual Returns

(5.9%) / 31% / 3.2%

Top Holdings with High CAPS Rating (4 or 5 Stars) and Portfolio Weight

Schlumberger (NYS: SLB) (19.3%)
Halliburton (NYS: HAL) (9.3%)
National Oilwell Varco (NYS: NOV) (8.6%)


SPDR S&P Oil & Gas Equipment & Services (NYS: XES)
Energy Select Sector SPDR (NYS: XLE)

Sources: Morningstar and Motley Fool CAPS.

On CAPS, 97% of the 131 members who have rated iShares Dow Jones U.S. Oil Equipment believe the ETF will outperform the S&P 500 going forward. These bulls include melgenraich45 and akok.

Having gotten on board a few years ago, melgenraich45 summed up the bull case: "[H]ow can you buck the trend re: oil and gas exploration, and the companies that do the dirty work to find these precious resources? This 'boom' is not even close to over until we get serious about alternatives to oil."

iShares Dow Jones U.S. Oil Equipment & Services, in particular, sports a portfolio whose stocks average long-term earnings growth of 19%. That's higher than that of main rival SPDR S&P Oil & Gas Equipment & Services (17%), as well as broader energy plays like Energy Select Sector SPDR (10%).

CAPS member akok expands on the outperform argument:

Oil services are being lifted primarily on the supply constraints -- new production being brought online are no longer compensating for the declines in oil production from mature fields ... Supply constraints will drive higher prices, given that there's little progress in alternative energy sources, especially for transportation. Look for this trend to be mitigated once viable alternatives (such as broad adoption of electric cars) are available.

What do you think about iShares Dow Jones U.S. Oil Equipment, or any other ETF for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional ETFs is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Want to see how well (or not so well) the stocks in this series are performing? Follow the newTrackPoisedToCAPS account.

At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of National Oilwell Varco. Motley Fool newsletter services have recommended buying shares of National Oilwell Varco. 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 Fool's disclosure policy always gets a perfect score.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.