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VanEck Vectors Oil Services ETF (OIH - Free Report) topped the list of the best-performing U.S. equity ETFs in January, gaining about 23%. The rally was driven by rising oil prices on supply disruptions and unprecedented demand.
Although most of the stocks in OIH’s portfolio have delivered strong returns this year, a few have gained more than 30%. These include NexTier Oilfield Solutions , Halliburton (HAL - Free Report) , Schlumberger Limited (SLB - Free Report) , Nabors Industries (NBR - Free Report) and RPC Inc. (RES - Free Report) .
Oil prices spiked to a seven-year high and notched the sixth straight weekly gain. Brent touched $90 per barrel last week for the first time in many years. The geopolitical turmoil in Eastern Europe over the Ukraine crisis has exacerbated concerns over tight energy supply.
The supply side of the energy market continues to be tight as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, stuck to their planned output increase of 400,000 barrels per day in February rather than boosting it further. On the demand side, increasing COVID-19 vaccination rates, loosening pandemic-related restrictions, and a growing economy have bolstered energy demand (read: 4 Sector ETFs to Bet On in 2022).
Added to the strong momentum is the state of backwardation in the oil futures market, where later-dated contracts are cheaper than near-term contracts. This signals that the oil market is tightening and demand is robust, paving the way for an oil rally. This trend is likely to persist at least in the near term, acting as the biggest catalyst for the commodity. Notably, Brent crude's six-month backwardation is the widest since 2013.
A slew of Wall Street banks and oil executives are forecasting a return to $100 oil.
Let’s take a closer look at the fundamentals of OIH.
OIH in Focus
VanEck Vectors Oil Services ETF tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. It holds 25 stocks in its basket with double-digit exposure to the top two firms.
With AUM of $2.6 billion, VanEck Vectors Oil Services ETF charges 35 bps in annual fees. The product has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: 5 ETF Zones Outperforming to Start 2022).
Below we have highlighted the above-mentioned five stocks in the ETF with their respective positions in the fund’s basket:
Best Performing Stocks of OIH
NexTier Oilfield is an oilfield service company with a diverse set of well completion and production services. It has an estimated earnings growth rate of 159.5% for this year.
NexTier Oilfield has soared about 70% in January and makes up for a 1.1% share in the OIH basket. NEX has a Zacks Rank #2 (Buy).
Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. The stock has jumped 37.1% this month and accounts for a 12.5% share in the ETF.
Halliburton has an estimated earnings growth rate of 66.7% for this year, a Zacks Rank #3 (Hold) and VGM Score of A.
Schlumberger is a leading oilfield services company, providing services to the oil and gas explorers, and producers across the world. Through oilfield services contracts, Schlumberger helps the upstream energy players to locate oil and gas, and drill and evaluate hydrocarbon wells. The stock has rallied 32.5% in January and makes up for 21.3% of the OIH portfolio.
Schlumberger has estimated earnings growth of 54.7% for this year, a Zacks Rank #2 and VGM Score of A (read: Energy ETFs Hitting New 52-Week High).
Nabors is one of the largest land-drilling contractors in the world, conducting oil, gas and geothermal land drilling operations. Nabors is up 32.4% in January and has an estimated earnings growth rate of 46.7% for this year.
Nabors currently carries a Zacks Rank #3 and has a VGM Score of B. It accounts for a 1.7% allocation in the OIH basket.
RPC is an oilfield service provider. It supplies equipment and services to the oil and natural gas explorers and producers in almost all of the prospective plays like the Rocky Mountain regions, Appalachian area, Gulf of Mexico and other resources in the United States. RPC has delivered returns of 30.6% in January and has an estimated earnings growth rate of 933.3% for this year.
Image: Bigstock
Best-Performing Stocks of the Top ETF of January
VanEck Vectors Oil Services ETF (OIH - Free Report) topped the list of the best-performing U.S. equity ETFs in January, gaining about 23%. The rally was driven by rising oil prices on supply disruptions and unprecedented demand.
Although most of the stocks in OIH’s portfolio have delivered strong returns this year, a few have gained more than 30%. These include NexTier Oilfield Solutions , Halliburton (HAL - Free Report) , Schlumberger Limited (SLB - Free Report) , Nabors Industries (NBR - Free Report) and RPC Inc. (RES - Free Report) .
Oil prices spiked to a seven-year high and notched the sixth straight weekly gain. Brent touched $90 per barrel last week for the first time in many years. The geopolitical turmoil in Eastern Europe over the Ukraine crisis has exacerbated concerns over tight energy supply.
The supply side of the energy market continues to be tight as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, stuck to their planned output increase of 400,000 barrels per day in February rather than boosting it further. On the demand side, increasing COVID-19 vaccination rates, loosening pandemic-related restrictions, and a growing economy have bolstered energy demand (read: 4 Sector ETFs to Bet On in 2022).
Added to the strong momentum is the state of backwardation in the oil futures market, where later-dated contracts are cheaper than near-term contracts. This signals that the oil market is tightening and demand is robust, paving the way for an oil rally. This trend is likely to persist at least in the near term, acting as the biggest catalyst for the commodity. Notably, Brent crude's six-month backwardation is the widest since 2013.
A slew of Wall Street banks and oil executives are forecasting a return to $100 oil.
Let’s take a closer look at the fundamentals of OIH.
OIH in Focus
VanEck Vectors Oil Services ETF tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. It holds 25 stocks in its basket with double-digit exposure to the top two firms.
With AUM of $2.6 billion, VanEck Vectors Oil Services ETF charges 35 bps in annual fees. The product has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: 5 ETF Zones Outperforming to Start 2022).
Below we have highlighted the above-mentioned five stocks in the ETF with their respective positions in the fund’s basket:
Best Performing Stocks of OIH
NexTier Oilfield is an oilfield service company with a diverse set of well completion and production services. It has an estimated earnings growth rate of 159.5% for this year.
NexTier Oilfield has soared about 70% in January and makes up for a 1.1% share in the OIH basket. NEX has a Zacks Rank #2 (Buy).
Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. The stock has jumped 37.1% this month and accounts for a 12.5% share in the ETF.
Halliburton has an estimated earnings growth rate of 66.7% for this year, a Zacks Rank #3 (Hold) and VGM Score of A.
Schlumberger is a leading oilfield services company, providing services to the oil and gas explorers, and producers across the world. Through oilfield services contracts, Schlumberger helps the upstream energy players to locate oil and gas, and drill and evaluate hydrocarbon wells. The stock has rallied 32.5% in January and makes up for 21.3% of the OIH portfolio.
Schlumberger has estimated earnings growth of 54.7% for this year, a Zacks Rank #2 and VGM Score of A (read: Energy ETFs Hitting New 52-Week High).
Nabors is one of the largest land-drilling contractors in the world, conducting oil, gas and geothermal land drilling operations. Nabors is up 32.4% in January and has an estimated earnings growth rate of 46.7% for this year.
Nabors currently carries a Zacks Rank #3 and has a VGM Score of B. It accounts for a 1.7% allocation in the OIH basket.
RPC is an oilfield service provider. It supplies equipment and services to the oil and natural gas explorers and producers in almost all of the prospective plays like the Rocky Mountain regions, Appalachian area, Gulf of Mexico and other resources in the United States. RPC has delivered returns of 30.6% in January and has an estimated earnings growth rate of 933.3% for this year.
RPC has a Zacks Rank #1 (Strong Buy) and a Momentum Score of A. It makes up 2% of OIH. You can see the complete list of today’s Zacks #1 Rank stocks here.