If you're looking for a stock to buy in the oil industry, a great place to start is with a company that can make money no matter what the current oil price is. The catch, of course, is there aren't a lot of companies that fit that bill. That can make it hard to find a great place to invest, particularly when crude oil prices continue to swing around but don't appear ready to push past $50 for the long term:
This is exactly what I like about Core Laboratories N.V. (NYSE:CLB), and it's a key reason it deserves consideration as the best oil stock you can buy. Let's take a closer look at what sets Core Lab apart and why it should be on your radar.
Expertise that's valuable in every market condition
Core Lab's expertise is reservoir optimization -- providing analysis of the materials a reservoir is made of, chemical data about the fluids produced, and a variety of other critical information producers need to most cheaply and efficiently recover oil and natural gas. This data and analysis is important throughout a reservoir's life cycle, and Core Lab is able to assist producers with both new production and improving costs and efficiency at existing reservoirs.
The draw from producers is twofold. When oil or gas sells for high prices, the more product a company can produce, the more it can sell at higher prices. Core Lab helps producers do exactly this. On the other end of the cycle, when prices are low, producers are more focused on lowering costs and improving efficient operations. Again, Core Lab comes in, providing the expertise to improve existing reservoir production.
There are very few oilfield service companies that can lay claim to still being in demand whether oil is cheap or expensive.
Ideal business model for cyclical, commodity-driven industry
There are a lot of well-run companies in the oil industry that do a lot of different things. But generally speaking, they often have high operating expenses, which can make it much more difficult to navigate a cyclical downturn. Core Lab's model is a much more "asset light," based largely on its intellectual property and technical expertise instead of owning the "picks and shovels." This means lower operating expense as a percentage of total revenue, and that really pays off when oil prices are low.
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