Investing Against The Grain

These stocks are not for the faint of the heart. Sometimes the best bargains can be found in times of crisis. In keeping with that theme here are 2 oil service companies that may be approaching value territory.

1. BP (BP)- As a longtime BP shareholder, I think that shares are becoming attractive again. The stock is down over $10 since the company’s oil spill in the Gulf of Mexico. The company’s reputation has taken a hit by the media railing against the oil giant. While the oil spill is terrible for BP, the oil conglomerate’s mistake could represent a solid investment opportunity for long term investors. At $50 a share, BP has a dividend yielding over 6.4%. Shares are worth owning for the dividend yield alone. If the stock breaks below $50, I will be looking to add shares to my current investment.

2. Transocean (RIG)  has seen its shares punished. The stock has dropped 21% over the last 2 weeks to close at $72.91 yesterday. The steep selloff in Transocean shares appears to be due to investor fear. In reality Transocean’s insurers are on the hook for the bulk of the damage. It’s believed that Transocean has very limited liability itself. I think that shares are attractively priced at this level. Investors should tread carefully though because there is always the risk of future lawsuits.   

Disclosure: I do own shares of BP.