The environmental, financial and all-around human disaster that is the BP Plc (NYSE: BP) oil spill is finally coming to a close, as efforts to eradicate any remnants of the leak are finally approaching the end stage. Now the focus for BP has turned legal. On Tuesday, a federal panel appointed a judge to oversee the hundreds of lawsuits brought by injured oil rig workers, fishermen and hotel owners. And while BP and its plaintiffs will be hashing compensatory issues out in the courts, investors need to start looking at the court of fundamentals to determine which oil service stocks deserve their attention. 

I’ve had many people ask me recently if the time is now right to once again buy oil stocks and oil drilling stocks.

My answer to them is both yes, and no. That’s because the focus now rightly will return to two critical characteristics. The first is strong fundamentals, and by that I mean sales and earnings growth. The second is strong buying pressure. If investors are buying a stock, then you’ve got momentum on your side. Conversely, if there’s a lot of selling taking place, then you’d better heed the warning of the herd.

Right now in the oil drilling space, there are three oil stocks my Portfolio Grader tool rates as "Buys" and three oil stocks that are rated as "Sells."

Oil Stocks to Buy – NR, RES, SWSI

Newpark Resources Inc. (NYSE: NR). The drilling fluid systems and well site management company recently reported better-than-expected Q2 results on higher drilling activity in the U.S., along with increased sales related to the Deepwater Horizon spill. The company’s also seen its share price explode. Year to date, the stock is up 94%.

RPC Inc. (NYSE: RES). This oil field services and equipment company also recently posted some very strong second-quarter earnings results, including revenue that nearly doubled to $252.9 million during the prior year. Along with the big earnings, the company also increased its quarterly dividend by 50%. RES shares are up 75% year to date, clearly showing that buyers have embraced this stock.

Superior Well Services Inc. (NASDAQ: SWSI). This well site solutions provider showed strong recent earnings, but the bigger news here is the company is soon to be purchased by oil and gas drilling giant Nabors Industries (NYSE: NBR). The Nabors buyout offer comes at a near 18% premium to SWSI’s share price as of Aug. 9. Considering that SWSI stock has climbed 55% year to date, it’s no surprise that this winning drilling services firm gets an "A" from Portfolio Grader.

Oil Stocks to Sell – DO, NE, RIG

Diamond Offshore Drilling (NYSE: DO). This drilling company stumbled badly in its second quarter, reporting a 42% decline in profits on weaker pricing. The firm also cut its special dividend to keep some cash in the coffer in the face of what was a deepwater-drilling moratorium that was imposed by the Obama administration following the BP disaster in the Gulf of Mexico. Sellers certainly have dominated this issue, with the stock down some 34% year to date. Portfolio Grader rates DO shares an "F" or a Strong Sell.

Noble Corp. (NYSE: NE). This oil and gas drilling stalwart had a very poor Q2, with revenues badly missing Street expectations. The company also missed on its bottom line, with EPS coming in at 87 cents per share, 18 cents below Street expectations. The company blamed the White House’s ban on deepwater drilling in the Gulf of Mexico for its horrible quarter. The stock is down 17% year to date, and the combination of poor earnings and big selling in the stock pushed NE shares to a "D" rating in Portfolio Grader, which translates into a Sell.

Transocean Ltd. (NYSE: RIG). Along with BP, Transocean is the key company in the Gulf oil spill. And though it may escape the worst of its liability issues, the damage has certainly been done to the company’s bottom line and its share price. Profits in the second quarter were down 12% as utilization rates slid and revenue declined. The company did, however, benefit from an insurance gain related to the loss of the Deepwater Horizon rig.  The stock is down 26% year to date, and Portfolio Grader rates the shares a "D".

Louis Navellier’s Top 10 Stocks for the Second Half — These must-own companies are the biggest wealth-builders for the second half of 2010. Get their names online here.