Dresser-Rand (DRC - option chain) shares are rising today after the company announced it has agreed to acquire diesel and gas engine supplier Grupo Guascor SL in a $690 million cash-and-stock deal. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on DRC.

"The oil services and equipment industries have been a hotbed of M&A activity over the past few years, a trend that should continue into 2011," says energy sector specialist Elliott Gue.

The editor of The Energy Strategist explains, Three of my top 10 takeover plays hail from this part of the energy patch: Core Laboratories (CLB), Dresser-Rand (DRC) and Dril-Quip (DRQ).

"With a market capitalization of more than $100 billion, Schlumberger (SLB) should add to the dozens of acquisitions it's closed over the past few years.

"In any industry, one of the most sure-footed means of keeping profits steady is to own the suppliers of production means -- the old 'invest in the picks and shovels' approach," explains Neil George in Personal Finance.

He says, "For refiners, it means pipe, compressors, and the other bits used to crack crude into further profitable products." Here, he looks at a trio of favorites: Dresser-Rand Group Inc. (NYSE: DRC), Shaw Group Inc. (NYSE: SGR), and Tenaris (NYSE: TS).

"Dresser Rand is a leading global producer of highly specialized compressors and turbines, nearly 95% of which are used in the energy business. Compressors are used extensively in refineries; they're a crucial part of equipment used to process heavy and sour crude oils. The reactions used to process these more-complex crudes require generating extreme pressure and temperature.

"Dresser's products are also used to process Canadian oil sands. Dresser is also involved in some high-tech deepwater equipment work. The company has designed a subsea compressor and separator for Norway's Statoil.

"This equipment literally sits on the seafloor; the compressor helps to separate gas from oil and transport these commodities by subsea pipeline to distant floating production platforms.