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2 Buy-Rated Oil & Gas Equipment & Services Under $10

The oil and gas companies have gained significantly this year due to rebounding demand and OPEC’s supply cuts. Goldman Sachs Group anticipates high oil demand in the upcoming years. This should bode well for oil and gas infrastructure stocks NOW Inc. (DNOW) and Geospace (GEOS). These stocks are currently trading under $10 and are buy-rated in our proprietary rating system.

The oil and gas sector has registered a stellar recovery in 2021. As the year draws to a close, the oil market seems to be on a better footing, and the surge of COVID-19 cases is expected to slow down temporarily but not derail oil recovery. Global oil demand is set to increase 5.4 mb/d in 2021 and by 3.3 mb/d in 2022 and return to pre-pandemic levels, according to the International Energy Agency (IEA).

The investment bank Goldman Sachs Group Inc. (GS) has predicted a high oil demand for 2022 and 2023. As post-pandemic demand has outpaced supply, oil prices have spiked in recent months. This should bode well for the oil and gas equipment companies. The global oilfield equipment market is expected to reach $139.3 Billion by 2026, growing at a CAGR of 2.8%.

Therefore, the under $10 oil and gas equipment and services stocks of NOW Inc. (DNOW) and Geospace Technologies Corporation (GEOS) might be solid bets. These stocks are rated B (Buy) in our proprietary POWR Rating system.


DNOW is a distributor of downstream energy and industrial products used in petroleum refining, chemical processing, LNG terminals, and industrial manufacturing operations. The company markets its products under the brand names DistributionNOW and DNOW.

On December 17, DNOW announced an amendment to its existing Senior Secured Credit Facility with a lenders syndicate. The amended credit facility extends the maturity date to 2026 and is expected to provide cost savings and other improved terms.

For the fiscal third quarter ended September 30, DNOW’s revenue increased 34.7% year-over-year to $439 million. Non-GAAP net income and non-GAAP EPS, excluding other costs, came in at $6 million and $0.05, registering a substantial increase over their negative year-ago values.

The consensus EPS estimate of $0.03 for the current quarter (ending December 2021) indicates a 112% year-over-year increase. Likewise, the consensus revenue estimate for the ongoing quarter of $426.34 million reflects an improvement of 33.6% from the prior-year quarter. Moreover, DNOW has an impressive surprise earnings history, as it has topped consensus EPS estimates in three out of the trailing four quarters.

The stock has gained 21.1% over the past year and 13.5% year-to-date to close Friday’s trading session at $8.15.

DNOW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

DNOW has a Growth, Momentum, Sentiment, and Quality grade of B. In the 52-stock Energy – Services industry, it is ranked #5. Click here to see the additional POWR Ratings for DNOW (Value and Stability).

Geospace Technologies Corporation (GEOS)

GEOS operates as a designer and manufacturer of instruments and equipment used in the oil and gas industry for acquiring seismic data used to locate, characterize, and monitor hydrocarbon-producing reservoirs. The company operates through Oil & Gas Markets; Adjacent Markets; and Emerging Markets segments.

On December 7, GEOS announced a $6.9 million contract with an international seismic contractor to deliver a considerable number of specialized geophones designed for monitoring vibrations in rugged environments. With deliveries expected to begin in May 2022, the company should benefit from this contract.

In October, GEOS and its subsidiaries, Quantum Technology Sciences and Geospace Technologies Canada, announced a joint-industry partnership (JIP) with Carbon Management Canada, a non-profit emission reduction solutions provider, to develop carbon storage monitoring technologies. The JIP is expected to help gas-storage companies increase operational efficiencies and reduce risks.

GEOS’ total revenue increased 8% year-over-year to $94.86 million for the year ended September 30. This can be attributed to a rise in product revenue of 122.2% from the prior year to $75.86 million.

The stock has declined 3.4% intraday to close Friday’s trading session at $7.39.

It’s no surprise that GEOS has an overall B rating, which translates to Buy in our POWR Rating system. The stock has a B grade for Value and Quality. It is ranked #1 in the same industry. To see the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for GEOS, click here.

DNOW shares were trading at $7.90 per share on Monday afternoon, down $0.25 (-3.07%). Year-to-date, DNOW has gained 10.03%, versus a 22.57% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.


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