NEW YORK ( TheStreet) – Oil prices are falling, causing panic among investors in some of the top names in the energy sector.
Not only is the S&P 500 energy sector down 3% year-to-date, but so is the oil price index that has declined 25% over a five-month period. The price of crude oil is now hovering around $77 a barrel and investors aren't taking any chances, for fear that weak oil prices over an extended period of time is too high a risk to bear.
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However, these cheap prices present a buying opportunity that energy investors haven't seen since last October.
Baker Hughes (BHI) , the world's third largest oilfield service company by market cap, is a prime example. Its shares have plummeted nearly 26.2% in six months and 33.8% since reaching a 52-week high of $75.64 in July. With the stock trading at around 16 times trailing earnings, which is more than two points lower than No. 1 Schlumberger (SLB) , these share are cheap.
Not to mention, Baker Hughes is expected to grow earnings by 150% to $5.59 per share in 2015, prompting Argus Research to raise its price target on the stock to $80. Analysts' price targets range from a high of $92 to a median target of $70, which calls for 12-month premium of 40%, according to CNN Money.
Compare that to the Dow Jones Industrial Average (DJI) and the S&P 500 (SPY) , which have gained 5.06% and 7.06%, respectively, over the past six months.