Investors are familiar with most of the big oil names, and many are also aware of the drillers. But how many can boast a knowledge of companies that are even more peripheral - the support businesses, the 'oil related' issues? Not many, and that's unfortunate because there are currently several such companies flying under the radar, offering very handsome yields and solid fundamentals. Here are a trio of them, each with relevant numbers and news for those who seek exposure to the current rise in crude, yet want the protection of a steady income stream.
IN PICTURES: 20 Tools For Building Up Your Portfolio
The Pipe Makers
WSP Holdings Ltd. (NYSE:WH) operates through a number of subsidiary companies that are based in China and produce equipment for oil and natural gas exploration, drilling and extraction. The products are essentially pipes, those manufactured to American industrial standards and those custom tailored to meet specific company demands. WSP shares trade over 100% higher than lows hit back in March of this year, after the company issued guidance that its 2009 earnings would come in lower than expected. Yet, after the climb, the fundamentals still look very strong. WSP offers investors a satisfying dividend yield of 6.5% per annum and has a one year trailing P/E of only 5.3. In addition, price to book is a low 1.1 and price to sales a mere 0.5.
From Crude to Retail
Calumet Specialty Product Partners, L.P. (Nasdaq:CLMT) has seen an even stronger surge in its share price over the last few quarters. After bottoming in November of 2008 at $5.77, the shares have sailed to a current $13.70, for a gain of over 135%. Yet they still pay a hefty 13% dividend and trade with a relatively small P/E of just 8.3 times last year's earnings. Calumet is involved in the creation of a broad range of hydrocarbon products used in the retail sector, including solvents, waxes, and lubricating oils, as well as unleaded gasoline, diesel fuel and jet fuel for the industrial and transport sectors. CLMT trades at breakup value (price to book is 1.01) and at a very low price to sales ratio of 0.21.
Potomac Electric Power Co.
Pepco Holdings Inc. (NYSE:POM) also has attractive fundamentals. The yield is 7.4%, and the shares trade with an earnings multiple of 11.5. price to book is 0.78, and price to sales only 0.32. The company's most recent earnings report saw an outsized jump in net profits of 66%. Pepco is in the natural gas delivery business, with a customer base spanning, New Jersey, Delaware, Maryland and Washington D.C.
The Bottom Line
It's not just the large integrated oil companies that are thriving with the recent rise in crude. These more peripheral players have also jumped. And according to their current fundamentals, they may still have room to grow. (To learn more, see The Industry Handbook: The Oil Services Industry.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
