This week, in our focus on the winning analysts in each industry category from our

Analyst Rankings -- Equity 2000

, we profile the top analysts tracking energy equipment and services, our first category in the energy sector. Next week we'll look at integrated oil and gas. (Our last focus was on

department and discount stores.)

No. 1-ranked Gordon Hall of

Credit Suisse First Boston

and No.3-ranked Kevin Simpson of

Merrill Lynch

share a very positive outlook on the energy equipment and services sector. The group outperformed the

S&P 500 Index by 44.9 percentage points in 2000. And both analysts believe that this sector will continue to shine in 2001.

Top-ranked Hall thinks the group is looking better than it has in more than 15 years. He projects strong capital spending by oil and gas producers, who are showing strong cash flows and low plowback ratios. He names

Varco International


as his top pick and likes offshore driller

Santa Fe International

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as well.

Third-place Simpson has a similarly optimistic outlook, but he predicts volatility for the group throughout the year. The current tight supply of both oil and gas, he asserts, will not be alleviated anytime soon. In addition, observing that valuations are below historical norms and arguing that analyst estimates are too low, Simpson believes the group is poised for a further rally. His top stock pick is

National Oilwell


. Simpson contends that the company is an industry leader in the business of making and rehabilitating oil rigs, which are currently in short supply. (

wrote a separate story on

escalating rig activity in the wake of rising natural gas prices.)

Energy Equipment and Services

Rate Their Stock Picks:

Which stock do you like best?

Hall: Varco International

Simpson: National Oilwell

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