The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.By Nathan Slaughter NEW YORK ( StreetAuthority) -- Despite what any financial academic or index fund advocate tells you, the market isn't perfectly rational. If it were, then it would be impossible to identify a stock that is meaningfully undervalued. There would literally be no way for an active stock picker to beat the market -- other than blind luck. But, as I was saying, that's not the case. The market is good, but it's not perfect. It makes mistakes. And we should all be thankful for that. Otherwise, there'd never be any exceptional buys. You can't get ahead by paying full price all the time. And we only get to buy stocks at attractive discounts of 50% or more because the market goofs up from time to time.
Much of the decline can be traced back to weak natural gas prices, which have slowed activity in places such as Louisiana's Haynesville Shale. But investors are missing the point. Customers aren't cutting back -- they're just shifting the focus from gas-directed drilling to oil-directed drilling. The natural-gas rig count has fallen consistently for several weeks, but the oil-rig count has exploded. Back in 2009, there were fewer than 200 rigs drilling for oil in the U.S. By this time last year, that number had quadrupled to 800. Right now, there are about 1,272 rigs working in places such as the Bakken Shale -- the highest since Baker Hughes ( BHI) started tracking this statistic a quarter-century ago. So these rigs aren't idle, they have just moved to wetter plays with better economics. Risks to Consider: Of course, with investing nothing is 100% certain. Any sustained drop in oil prices could bite into exploration and production expenditures and thus drilling activity. Patterson still has many outdated rigs that will need to be retired and replaced. The regulatory environment for hydraulic fracturing is also still something of a wild card. Action to Take --> But with shares trading close to their 52-week low, PTEN may be approaching its bottom. And with the company trading at just seven times earnings and at a PEG ratio of .30, now could be a good time to gain exposure to this fast-growing energy company. Nathan Slaughter does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article. More StreeAuthority Stories:
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