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As oil prices rise, deep water drilling will be an area of solid growth, said Rob Lutts, founder and CIO of Cabot Money Management.
(See below for Lutts' stock picks.)
“I saw many forecasts and had many discussions with CEOs on how deep water drilling activity over the next five years is likely to grow substantially,” said Lutts, who just returned from the Howard Weil Energy Conference in New Orleans. “In some areas, up 50-70 percent."
"This is because the easy wells have all been exhausted. And in order to find more oil today, you have to drill more in the deep water. So these companies are positioned to benefit from that,” he said.
“I believe it won’t be too many more months before we’re back up in another supply-demand squeeze,” said Lutts. “We’re in an interesting place to find some nice companies in the energy field.”
Lutts Recommends:
Drill-Quip [DRQ
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“They’re in the sub-sea wellheads, which is part of the deep water drilling, which is the fastest-growing. They’ve got around $500 million in revenue and management owns 24 percent of the company. These are most conservative managers and a real quality team.”
Oceaneering International [OII
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“This company is one of the leaders in its space and I think even if energy is down today and it’s going to grow this year.”
Disclosure:
Disclosure information for Rob Lutts was not immediately available.
Data is a real-time snapshot *Data is delayed at least 15 minutes