Bullish on oil, bullish on Weatherford International

Posted Sep 29th 2009 3:00PM by Joseph Lazzaro
Filed under: Stocks to Buy

Recent, soft natural gas prices have hurt oil/natural gas services company Weatherford International Ltd. (NYSE: WFT), but that in no way changes the company's positive long-term prospects, which is why I'm Reiterating my Buy rating for Weatherford, first recommended on June 4, 2009 at a price of $20.85.

The trough in oil/natural gas servicing will likely end in F2009; margin recovery may lag, but upstream capital spending should provide a nice tailwind heading into FY2010. Institutional investors have sensed this, and it's one reason they've been incrementally added to their WFT positions since March. The First Call FY2009/FY2010 EPS estimates for WFT are 72 cents to $1.12.

Technically, there is the danger of a double-top at/near $24, but given oil's and natural gas' long-term bullish characteristics, that double-top can be ignored and won't likely come into play.

Stock Analysis: Weatherford International Ltd. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in WFT now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your WFT position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $6.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: inthenews, Weatherford International, WFT