Weatherford International Ltd. (NYSE:WFT) provides equipment and services used in the drilling, evaluation, completion, production and intervention of oil and natural gas wells to independent oil- and natural-gas-producing companies worldwide. The company was founded in 1972 and is headquartered in Geneva, Switzerland.

While the S&P 500 continues its inexorable march steadily higher, some sectors have actually not participated — with one sector, oil drillers, lagging sharply. Weatherford has been a recent underperformer to the sector as well, but is finally beginning to show some life.

Consensus earnings estimates are for $1.55 in 2012, putting its forward P/E right around the 10 level, in the lower quadrant for valuation. That being said, the company is growing at nearly 70%, with a price-to-book value of just 1.2, so shares are certainly cheap on a price-to-earnings-growth basis.

Technically, the shares are poised to break above the 200-day moving average at $17, which has also been a resistance level twice in the past.

Given the relative underperformance of the stock, I’m looking for WFT to break out to the upside and move to the $19 level by May options expiration.

Based on WFT’s current market price of $16.54 and using a target price of $19, a target date of May 18, 2012, and $1,000 of investment capital, this is an excellent candidate for capturing some nice gains by buying the WFT May 12 Calls or buying the WFT May 16-19 Call spread, or using another options strategy that best fits your trading style and goals.

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