In part one of this series, I discussed the best ways to play the hurricane season with a few "onshore stocks." Today, I am delving into the offshore sector, which is where I think there is more upside, as the baseline sector fundamentals are much stronger. All of the offshore picks are levered to the energy sector, and with today's persistent, annoyingly high energy prices; it is a good time to be operating in this field.
And let me repeat my statement from part one regarding the types of trades these are. We're looking for these stocks to have a short-term pop off of news of a storm, not as longer-term fundamentals plays, unless otherwise stated. Any hurricane portfolio should strongly overweight the offshore plays.
Hornbeck Offshore Services ( HOS): Drilling rigs and platforms are not self-sustaining, especially during hurricanes. HOS provides offshore support vessels to the industry, and its services and vessels are in high demand before and after any rough weather. The company has the youngest and second-largest OSV fleet in the Gulf of Mexico. It owns 35 new-generation vessels, plus 10 older conventional non-core vessels, with plans to growth the fleet to 65 by 2010. I like this one short and long term. Bristow Group ( BRS): This is the "let's get out of Dodge" (before the storm hits) play. Bristow provides helicopter services to the offshore-energy industry. It owns and operates 548 helicopters, with another 25 on order. Energy companies use its services to both evacuate and bring employees back to oil platforms. It is an operating duopoly that controls two-thirds of the helo-transport market, along with CHC helicopter (privately-held). Oceaneering ( OII): This company is the market leader in Remotely Operated Vehicles (ROVs), with 210 vehicles. These vehicles are unmanned machines that perform a variety of tasks in underwater areas that are too dangerous for humans, such as pipeline repair in the depths of the ocean after hurricane damage. I like to think of ROVs as a benevolent Arnold Schwarzenegger in Terminator that works to help repair damaged oil wells.