It’s always a good idea to have a watch list of companies you’d like to buy if the price was right. While my portfolio is heavy on oil and gas producers, it’s a bit lighter on those companies that service the industry. These “pick-and-shovel” plays don’t carry the same operational risks as an exploration and production company that yields a more stable profit picture. That being said, the share prices are subject to the volatility in the price of oil, meaning that investors could be able to pick up shares on the cheap if oil falls further.
Core Laboratories N.V. (NYSE:CLB)
I’ve been watching Core Laboratories N.V. (NYSE:CLB) for over a month now, hoping for a really big pullback so I could add shares to my portfolio. The stock recently was starting to come down off its highs as the price of oil dropped. Unfortunately, for me at least, the hopes of snagging shares cheaper vanished, with shares jumping after its first quarter earnings release.
The company reported its most profitable quarter ever, with both revenue and earnings at all-time highs. Meanwhile, the company’s share count is now at a 15-year low thanks to meaningful share repurchases. While I’d love to own shares of the company behind the science of oil and gas production, I’d like to buy it much cheaper, and that will only happen if oil takes a big dive.
FMC Technologies, Inc. (NYSE:FTI)
I feel much the same way about FMC Technologies, Inc. (NYSE:FTI). Its subsea services business is in the right place at the right time given how active drillers are in the deepwater. The company just signed a four-year deal with Brazil’s Petrobras to provide it with subsea services. The deal, which extends the two companies’ decades-long relationship, is just one of many that FMC Technologies, Inc. (NYSE:FTI) has signed over the past year.
My one concern with FMC Technologies, Inc. (NYSE:FTI) is that oil-field service giant Schlumberger Limited. (NYSE:SLB) is teaming up with Cameron to compete in the subsea marketplace. Given Schlumberger’s deep pockets and Cameron’s expertise, the joint venture that’s being created, called OneSubsea, poses a real threat.
The good news is that FMC Technologies, Inc. (NYSE:FTI) continues to announce new deals like the one from Petrobras. That means that, even with this new entrant, it’s able to continue to compete and win in the marketplace. Unfortunately, that means shares still remain at prices higher than I’d rather pay, so I need a deeper dive in the price of oil before shares become a tempting buy.