Gulf Repair Job Tougher Than Expected
In addition, inspection companies like Oceaneering International (OII) and service companies like Superior Energy Services (SPN) are also profiting from the need for repair and support services in the Gulf.
Volatility the Norm
The challenges to supply combined with strong demand for services suggest that the positive outlook for energy stocks should remain in place in the coming months. That said, recent action in energy equities has unsettled many investors who saw 10% to 20% of their energy holdings evaporate.
The shoulder season -- the period between high summer cooling demand and the beginning of winter heating season -- is a traditionally volatile period for energy stocks. And, with the meaningful acceleration in energy stock prices as a result of the storms and high commodity prices, it shouldn't be a surprise that they can move just as fast in the other direction.
A consistent theme in my advice about the sector -- and investing in general -- has been to stick to your discipline and understand your tolerance for risk and volatility. There is an opportunity ahead to re-enter the sector or build additional positions. That said, there is also likely some additional choppiness ahead. However, with earnings on the horizon and strong outlooks likely from industry leaders like National Oilwell Varco (NOV) and Nabors (NBR), third-quarter results and year-end outlooks should provide a jump start for many of the energy stocks.
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