"Oil recently suffered a pullback, but we think it's temporary," says Brandon Clay. In Invest with an Edge looks to deepwater drilling services for his top 2010 pick -- Oceaneering Int'l (NYSE: OII.
"The Texas-based oil and gas services company gets most of its revenue by providing goods and services to companies that are drilling for oil and gas offshore. One of their specialties is deepwater remotely-operated vehicles (ROVs), or 'robots' in layman's terms.
"Oceaneering has turned a profit every year since 1999, including a record $3.65 a share in 2008. Analysts are forecasting a drop to $3.38 a share for 2009, but they also expect a nice rebound to $3.51 a share in 2010.
"The shares still appear inexpensive at just 16 times forward earnings. The firm's balance sheet is in good shape with just $140 million in debt and nearly $96 million in free cash.
"Oceaneering fills a unique niche in its industry. They help oil and gas explorers drill in deep water locations hundreds of miles offshore. Its services are expensive, but producers like Chevron and ExxonMobil have little choice if they want to replace their reserves.
"OII is in a market sweet spot. For an indirect play on rebounding crude prices, go with oil services performer Oceaneering International."
