NEW YORK ( TheStreet) -- General Electric's (GE) buy of Lufkin Industries (LUFK) doesn't strike me as a reason to get enthusiastic about oil drilling services. In fact, it's doing a bit of the opposite for me.
That's because oil services stocks in general, and Lufkin in particular, have been a very bad place to be invested in the past 18 months, greatly underperforming the rest of the energy sector and the S&P index at large. While there is a certain value in paying out a premium and buying a company when its shares are at a relative low, there is also the question of why it is GE that is paying it.
After all, GE, while involved in oil and gas, is not an energy company. Lufkin is a very specific oil services group, operating in advanced injection technologies that help in tight oil plays but are more often used in augmenting the lifespan of wells that have begun to naturally attenuate production.
Lufkin is also hardly alone in the list of oil services companies that are at very low levels and could be seen as "value priced" -- if there were interest in further consolidation. But I don't see anything substantial in the flood of speculation on which might be the next oil services company slated for takeover.I might have felt differently if the Lufkin suitor was an oil services company convinced that the rig counts had reached their downside limit. But the Lufkin buyer wasn't Schlumberger (SLB) or Halliburton (HAL). It was GE. That, to me, sounds more like the decision of an accountant and less of an oil man. I talk more about the deal with Joe Deaux in the video above. At the time of publication the author had no position in any of the stocks mentioned. Follow @dan_dicker This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV