Barron’s Analyst Naureen Malik recommends TWO Deepwater Oil Stocks:

a. Oil prices declining has turned the tides against energy stocks in recent weeks.

b. Tranocean and Tidewater are down from their lofty heights to very attractive valuations.

c. Offshore drilling activity continues to be robust in the global hunt for oil to meet rising demand and replace aging fields. Day rates for drilling rigs and vessels continue to rise due to limited supplies and the bullish cycle should last several more years; the nine new rigs Transocean will receive in 2009-2011 are already contracted.

d. Tidewater is expected to tag on another stock-buyback program, and Transocean could do the same or offer a hefty special dividend.

e. Drilling activity would remain highly profitable even if oil is trading at $80 or $90 a barrel. Not only are Transocean and Tidewater market leaders in the hottest space in energy, but right now their stocks are also the cheapest in the offshore drilling industry.

f. Both firms cater to the energy sector’s richest companies, from giants like Exxon Mobil (XOM) and BP (BP), to national oil companies, and even large independent producers.

g. unless there is a drastic downturn in the global economy, shares of Transocean and Tidewater should leap ahead with solid earnings growth.

Track Naureen’s picks at:

http://trackthepros.com/categories.php?category_id=692