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A Great Opportunity in the Oil Services Sector

I've recently found very little to like in the oil services sector, but a move this week has me looking very seriously at starting a position in National Oilwell Varco (NOV), an admitted underperformer for the past two years.  Let's take a look at what happened and why I'm warming up to this gargantuan services name.  

First, let me clear up why I've avoided the oil services sector -- there are just too many variables to assess in finding a strong candidate for investment.  The sector companies that are most well known, like Halliburton (HAL), Schlumberger (SLB), Baker-Hughes (BHI) and Weatherford (WFT) will encompass the gamut of services, from consulting to maintenance, from rig engineering to transport logistics and will do it in almost any environment; onshore and off shore, traditional and pressure pumping.  Finally, they are expanding services in all corners of the globe, where margins can be radically different in Iraq compared to the Gulf of Mexico.  Unless you have insight into the global trajectory of drilling in multiple venues, you're less apt to trade the big services companies well.  

Which brings us to National Oilwell Varco, a company much more focused into offshore drilling than other venues and one that has underperformed for most of the last two years.  To me, this underperformance has been as much a function of price as of the nature of the business -- there was hardly a catalyst to drive the share price higher. …

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