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Bullish on Oil Service Companies: Strategists

The oil service sector is looking very attractive, and it is time for investors to start putting money into the small cap companies, according to Khuram Chaudhry of Bank of America Merrill Lynch and Sonja Schemmann of Schroders.

“Oil service is one of the areas I am very fond of right now,” Chaudhry told CNBC.

He said investors should look into moving into the smaller-cap oil companies. “Despite the fall in the oil price from $147 to $30, the oil sector has continued to outperform the market,” he said.

“Now is one of those opportunities to buy some of the small-cap service companies at the expense of some of the larger-cap companies. So there’s a natural rotation within the sector—it has been favored to the large caps; now there’s a rotation as the oil prices start to go higher, so that we actually want to move back into the smaller cap companies.”

Schemmann explained her positive take on the oil service sector.

“You want to expose yourself to the specialist in the [oil service] field because the costs have been coming down as capital expenditure has been coming down, so while it’s not as rosy as it was in the heyday...it’s a sector that in the longer term, sits on a very nice secular growth,” she said.

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Oil Services Companies:

Schlumberger

Halliburton

Baker Hughes

BJ Services

Weatherford International

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Disclosure:

Disclosure information for Chaudhry and Schemmann was not immediately available.

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