Oil Services Firms: Hardest Hit. Deepest Value?
Investors looking for exposure to crude may appreciate this ETF's sensitivity to oil prices.
One of the hardest-hit groups in the oil patch may also represent the deepest value for intrepid investors with the stomach to withstand continued volatility during the next year or so. According to the aggregated fair value estimates of Morningstar equity analysts, Market Vectors Oil Services ETF (OIH) is currently trading at an 18% discount.
While oil services firms represent attractive long-term values, they could still be in for more rough sledding during the next 12 to 18 months as the oil markets have yet to settle into equilibrium. Given the current state of excess supply and slowing demand from key consuming markets like Europe and China, a snapback recovery in oil prices doesn't seem very likely.
John Gabriel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.