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Schlumberger (SLB) Jumps 33.9% YTD: More Scope for Growth Left?

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Shares of Schlumberger Limited (SLB - Free Report) have jumped 33.9% year to date (YTD) compared with the industry’s 1.2% growth. The Zacks Rank #2 (Buy) stock witnessed a rise in the Zacks Consensus Estimate for 2022 and 2023 earnings over the past 30 days.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s delve into the factors behind the stock’s price appreciation.

What’s Favoring the Stock?

The price of West Texas Intermediate crude, which is trading above $92 per barrel, has improved drastically in the past year. Concerns for possible Russian invasion in Ukraine are primarily driving oil prices. Strong demand for fuel, as economies are bouncing back gradually from the worst of the pandemic, is also aiding the rally in crude price.

High oil price is beneficial for exploration and production activities, which will lead to increased demand for oilfield services since oilfield service players help drillers efficiently set up oil and gas wells. Schlumberger, a leading oilfield service player, is thus well-positioned to capitalize on the mounting demand.

Last month, Schlumberger reported strong fourth-quarter results, resulting from higher contributions from Europe/CIS/Africa, strong North America rig activity and increased well construction activities in the U.S. Gulf of Mexico.

Schlumberger is expecting handsome growth in both international and North American markets. The company believes that oil demand will exceed the pre-pandemic mark before 2022-end and will continue to strengthen next year.

It seems the outlook for Schlumberger’s oilfield services is bright and there remains plenty of room for further price appreciation.

Other Stocks to Consider

Other prospective players in the energy space include Exxon Mobil Corporation (XOM - Free Report) , SM Energy Company (SM - Free Report) and Sunoco LP (SUN - Free Report) . While ExxonMobil and SM Energy sport a Zacks Rank #1 (Strong Buy), Sunoco carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil has a pipeline of lucrative upstream projects that will secure strong cashflows. The project pipeline is centered around ExxonMobil’s assets in the Permian – the most prolific basin in the United States – and offshore Guyana resources.

ExxonMobil recently reported strong fourth-quarter results, thanks to improved realized oil and natural gas prices as well as higher refining and chemical margins.

SM Energy’s operations are centered around the prolific Midland basin, spreading across roughly 82,000 net acres. SM Energy is strongly focused on improving its balance sheet strength.

Over the past seven days, SM Energy has witnessed upward earnings estimate revisions for 2022.

Sunoco generates stable cash flows since it is a leading independent fuel distributor in the United States. With a growing energy infrastructure platform, Sunoco secures roughly 2,500 commercial customers.

Over the past 30 days, Sunoco has witnessed upward earnings estimate revisions for 2022. Overall, with the demand for traditional motor fuels expected to remain in place, Sunoco is well placed to continue generating stable cash flows.

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