3 Depressed Energy Stocks to Buy

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While experts and pundits debate the state of the global economy, a look at energy and materials stocks would seem to reflect a global depression of epic proportions. Energy stocks in particular have been falling and just cannot catch a bid.

cameron subsea oil 630

I am not sure whether traders think that slowdown in capital spending by major oil companies is permanent in nature, or if the fervor surrounding the UN climate conference has everyone thinking fossil fuels are dead … but I suspect both viewpoints will end up being incorrect.

Shares of these energy stocks are priced for the end of the world and are reaching the point of maximum pessimism.

Which means there’s only one way to go.

Depressed Energy Stocks – McDermott International (MDR)

Depressed Energy Stocks - McDermott International (MDR)YTD Performance: -34%

McDermott International (MDR) is an engineering and construction company that specializes in complex offshore oil and gas projects. MDR builds offshore platforms and subsea equipment that is used to drill for oil and gas.

The company has had a rough couple of years but has undergone a substantial restructuring and management changes, and a turnaround seems to be in place. McDermott has a $4.1 billion backlog and is bidding on $8.4 billion worth of work at the moment.

The stock has lost about a third of its value in 2014 and is down about 90% from its pre-recession highs. The stock is now trading at about 90% of book value and appears to be a bargain issue with the potential for outsized long-term returns.

Depressed Energy Stocks – GulfMark Offshore (GLF)

Depressed Energy Stocks - GulfMark Offshore (GLF)YTD Performance: -30%

GulfMark Offshore (GLF) also provides services to the offshore exploration and production industry. Their vessels transport materials, supplies and personnel to offshore platforms and also are used to move and position drilling structures.

GulfMark has a fleet of 76 vessels around the world including a strong presence in faster-growing markets like Southeast Asia, Brazil and Mexico. The company is actually showing decent earnings growth this year, but the stock still has fallen by 30% so far in 2014.

The stock is trading at 80% of book value and appears to have substantial recovery potential. Insiders appear to think so too, as a few of them have made open-market purchases of the stock in the past six months.

Depressed Energy Stocks – Tidewater (TDW)

Tidewater-185YTD Performance: -32%

Tidewater (TDW) provides similar services to the offshore oil and gas companies. They have a fleet of more than 350 vessels. TDW also has two shipyards that are used to construct and repair deep water vessels.

Tidewater had a fantastic second quarter, with 45% year-over-year earnings improvement. The analysts who follow the stock expect to see strong growth over the next five years, but the stock still has sold off by more than 30% this year.

TDW stock trades at just 75% of book value and appears to have substantial upside for patient investors.

As of this writing, Tim Melvin did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/09/energy-stocks-oil-services-tdw-glf-mdr/.

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