Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Basic Energy Services (NYSE: BAS ) have popped 11% today after receiving an upgrade, while the market anticipates increased demand due to drilling in Angola.
So what: Dahlman Rose upgraded shares to a buy rating yesterday but the big drivers came today. Oil is up 3.6% in trading, driving oil industry service competitors like Key Energy Services (NYSE: KEG ) , Nabors Industries (NYSE: NBR ) , and Halliburton (NYSE: HAL ) all significantly higher today. There may be some bounce from contracts awarded in Angola today as well, which should expand ultra-deepwater offshore drilling significantly.
Now what: Service providers are indirectly dependent on high oil prices to boost business, so the pop on a rally in oil isn't a big surprise. Oil has been all over the place lately, so I would prefer to buy shares of Basic Energy Services when it's reaching lows. In the long term, I think oil will continue to rise, but I'm not seeing today's bounce as a buying opportunity right now.
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