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Stephanie Link -- Notes on SLB

NEW YORK (TheStreet) -- Schlumberger (SLB) shares have been pummeled along with other oil services and energy stocks. It's off 23% from its recent highs and well below levels set back in August of last year at $92.22.

The reason is because of concerns about slowing global growth which has resulted in a 25% drop in the price of crude. Oil services stocks are one of the most leveraged ways to play the energy sector because the projects that they are contracted for are based on the health of balance sheets of their customers, the integrated and national oil companies. So as oil prices move higher, the international and national oil companies make more money and put that cash to work to find oil and natural gas around the world - and they rely on the oil services companies to help in that process.

Schlumberger -- the largest oil services company in the world - has the broadest technology platform, a deep customer list, and diversified geographic presence with 67% of its revenues international and 33% USA. Its dominance has led to strong market share growth over the last several years relative to its peers - Halliburton (HAL), Baker Hughes (BHI), and Weatherford (WFT). Also noteworthy is its exposure to the fastest growing areas in the energy markets -- deep-water (30% of revenues) and exploration (40% of revenues).

Jim and I were discussing the overall decline in SLB (although it had a good day today rallying 2 1/2%) and were in disbelief that a company of this caliber has taken such a beating. Part of it is the oil decline and part is because of the challenges in pressure pumping in the North American markets. Plus, the uncertainties globally make investors nervous that some of the projects could be cancelled should oil continue to fall. We've owned it in Action Alerts Plus several times and were contemplating getting involved again. It's cheap - 11.9x forward earnings estimates vs. its 22.7 historical multiple and 9x group average. It should trade at a premium to the group given its market share, balance sheet, and product/client depth - but relative to its historical multiple -- it's cheap. It's on our radar -- but we own others that we like better that are also down a lot as well -- like Ensco (ESV), Devon (DVN), and Chevron (CVX).

To see our latest thoughts on these and other stocks please visit Action Alerts Plus and Real Money.

Co-Portfolio Manager of Jim Cramer's Charitable Trust Portfolio, Action Alerts PLUS Portfolio. This includes developing a macro outlook, stock selection, and daily written analysis in managing the fund and for subscribers to follow and participate. It also includes a weekly summary report of the strategy, positions and ranking of each stock in the fund. Promote the product through weekly videos independently and with Jim Cramer on the website. Strategy responsibility includes overseeing all content, talent, supervision and developement of the premium website services. Appear regularly on Maria Bartiromo's "The Closing Bell", Larry Kudlow's "The Kudlow Report" and CNN affiliate The Wall Street Shuffle.

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