We will stick to our theme from last week with the stock market looking like it might be abused by bears. Once again, we specifically looked to low-priced stocks with insider buying that are trading considerably below their 52-weeks highs, and where the insider has some history of being on the right side of the trade.
The idea is a small investment where investors can, as a friend puts it, “set it and forget it”. In other words, invest and come back after the bear storm has passed. Meanwhile, risk is limited to the amount invested. That’s why low-price is key, a few hundred to a few thousand in, hoping the company can come close to its 52-week glory.
Oil States International, Inc. (OIS) Executive Vice President and Chief Operating Officer (COO) Philip Scott Moses purchased 58,264 OIS shares at $3.6274 on September 23, 2022, investing a total of $212,654. It’s not a small investment and is his lone buy. Before last week, Moses only parted with stock, selling three times from November 2015 to February 2019. He collected $549,302 from his trio of red tickets. (1)
In our book, it’s called a change of heart when an insider buys after a record dominated by selling.
Oil States International provides oilfield products and services for the drilling, completion, subsea, production, and infrastructure sectors of the oil and gas industry worldwide. The company operates through three segments: Well Site Services, Downhole Technologies, and Offshore/Manufactured Products.
Oil and gas have taken it on the chin as the Federal Reserve boosted the US Dollar by raising interest rates. Commodities, like oil and gas, tend to have an inverse relationship with the greenback. When the dollar is strong, commodities are weak and vice versa.
Perhaps, oil prices could be set to get a little wind to their back as OPEC could cut production during its October 5, 2022 meeting. According to Reuters, the consortium of oil-producing countries could reduce production by as much as 1 million barrels per day. (2) Reducing supply could help offset the negative impact of a strong dollar.
Rising oil prices could give OIS’ price a short-term boost. As we type, shares trade at $3.89, with a 52-week low of $3.51 and a high of $9.02. Wall Steet has a consensus one-year price target of $7.83. (3)
Analysts see the oil and gas company earning $0.31 per share with revenue of $827.35 million in 2023. That’s up for a projected loss of $0.17 per share on sales of $732.70 this year.
The average company in Oil States International trades at 31.5 times earnings (P/E) and at 1.7 times sales (P/S). If OIS traded at the industry averages and hit Wall Street’s 2023 earnings and sales expectations, it generates possible price targets of $9.77 and $22.01, for P/E and P/S respectively.
Overall: Oil States International, Inc. (OIS) might be a solid “set it and forget it” stock for investors seeking oil and gas stocks. OIS could have attractive upside based on analysts’ sales and profit forecasts for next year. With a beta of 2.99, OIS stock will be volatile and is appropriate for high-risk investors with at least an 18-month time horizon.
1 – https://www.secform4.com/insider-trading/1645925.htm
2 – https://www.reuters.com/business/energy/opec-has-begun-talks-output-cut-oct-5-meeting-opec-source-2022-09-29/
3 – https://finance.yahoo.com/quote/OIS?p=OIS