NEW YORK (TheStreet) -- I was talking to Stephanie Link today about materials stocks and the price of oil. Stephanie thinks that many of her readers are trying to bottom-pick some materials stocks that have been hurt by falling oil prices. I agree with her that it's too soon to try and find cheap winners in that space.
Many of the biggest winners in 2013 and early 2014 in materials stocks were a result of oil and other commodity prices that were high and steady. Since the collapse of commodities many of those favored stocks including Fluor (FLR) , Foster Wheeler (FWLT) , Chicago Bridge and Iron (CBI) and KBR Inc. (KBR) have collapsed as well.
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Stephanie asked me my take because many of these companies have announced huge capital expenditure budgets for 2015, which has inspired many of her subscribers to ask whether this is the time to buy what look like value-priced shares.
I agree with her that we are just beginning to see the results of a long and depressed oil price and general commodity deflation. Particularly you see this in the numbers for rig counts on drilling, where permitting requests are already down 17%. Lower permits lead to lower spends and lower production, although none of this is immediately apparent.