This from Taipan Daily:

Key Energy Services (NYSE:KEG) is the largest rig-based well service company in the world.

You could say the main job for a company like Key is to “keep the oil & gas flowing.” Once a well is drilled, that well has to be maintained and serviced throughout its life. This is what Key does.

It’s a great business because you always have clients and you always get paid. The world is not going to give up its oil and gas addiction any time soon… and as long as we need fossil fuels, we’ll need companies like Key.

Being the largest well service company in the world, Key also has one of the most attractive client rosters in the world. The company’s client list is populated with blue-chip names like BP, ExxonMobil, ConocoPhillips, and others.

Key’s operations are primarily in the U.S., but the company is also expanding in energy-rich places like Russia and Mexico. The rising trend of NOCs – nationalized oil and gas companies – is good news for a player like Key.

While oil rich governments are happy to take over the means of production and shut out the oil majors, it’s often the case that the host country is short on technology and expertise. So they invite in savvy outsiders like Key to come service the wells (and to provide other high-margin services on the side while they’re at it, like equipment rental).

An Undisputed Market Leader

It’s also important to note that Key Energy Services is the undisputed market leader in its field. In a challenging oil and gas environment like the one we’re now in, being the market leader carries a number of advantages. For example:

Key has a higher class of customer due to its focus on top-notch service, training and equipment (and its willingness to invest in all three areas). Because Key’s customer base runs more to the “big boys” – supermajors, large independents and so on – Key is less likely than smaller competitors to take a revenue hit from reduced customer spending.

Key is able to charge a premium for its services because of its position as a market leader (and reputation for quality levels above and beyond the competition).

Key’s balance sheet is secure; the company’s long-term debt doesn’t mature until 2012, and cash levels and credit lines are healthy. This is a BIG edge in comparison to Key’s smaller competitors, many of whom are seeing their liquidity dry up.

Key Energy Services has a little bit of leverage on its balance sheet – long-term debt closes in on $600 million – but that’s forgivable because the debt has years to maturity, and as a well service company, Key’s cash flow comes in like clockwork.

Key’s Powerful Growth Rate

One of the truly unbelievable things about Key right now is the valuation. As of this writing, Key trades for 3.73 times earnings.

This is amazing because of the powerful growth rate Key has booked in recent years. The slide below is from a recent Key presentation at the 2008 Bank of America Energy Conference.

As the chart shows, Key has kept up a better than 15% compound annual growth rate (CAGR) for the past four to five years. If that pace continues, revenues will double in the next five years. And even if Key’s growth rate were to fall by half, revenues would still double in a decade. Higher revenues mean fatter profit margins for a well service company like Key, by way of cost efficiencies and greater operating leverage.

And yet, in spite of all that, Key now trades for three to five times earnings due to the panic. Three to five times earnings!

That means somebody with a big enough chunk of cash (or the right financing) could hypothetically buy this healthy, vital, steadily growing, blue-chip-plated business for a song… and have the earnings stream pay for their whole purchase in three to five years!

For a rock-solid business with steady cash flow and blue-chip customers, that kind of value is unheard of.

The only reason we are seeing opportunities like this is because small investors are panicked and the big institutions are tapped out. All the asset managers who would normally be backing up the truck for companies like Key have instead been forced into a defensive crouch.

These types of bargains won’t last forever. When sanity returns to markets and oil resumes its long-term rising uptrend (as it certainly will do), Key could again become a $20 stock. That would be a more than 300% gain from today’s levels.

Action to take: Buy Key Energy Services (NYSE:KEG) up to $6 per share.

PS. This is the first of a five-part free report “Five Stocks To Grow Rich On” from the Taipan Publishing Group. Follow the link below to find out more.

Source: A Deep Well Of Profits

This from Penny Sleuth:

Investing in the stock market is an all-out war. No, we’re not referring to the madness on the trading floors or the tug of war between buyers and sellers. Investing is actually a war against our own impulses.

An e-mail exchange with a colleague of mine sums it all up perfectly: “Sure, the market may go lower,” he writes, “but the lesson is that people are always doing the opposite thing than what they should be doing.” I know you’ve heard this before — we all have. But no one ever listens while they are in panic mode.

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Common sense tells us to buy low and sell high. But with most investors, this is never the case. Many will buy stocks only to see them drop and then sell shares in a panic, no matter how well underlying company might be performing. We’re trapped by our own false sense of urgency — unable to execute sound investing decisions through the panic.

The market is in a tailspin. Now is the time to be cold and calculating, impervious to the panic that surrounds us. If we give in to our short-term fears, we only stand to lose out on long-term opportunities…

Think about the current panic for a moment. There are “players” in the market who are relishing at the opportunity to buy YOUR shares for a lower price. They are quite aware that panic means profits and each tick down means a future of 10 or 100 ticks higher. The only difference is that they have the benefit of discipline.

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They look at the indicators that others ignore. They see the pump priming from the Fed. They see insiders buying up shares like they are going out of style. They may be scared too, but unlike the proverbial deer in the headlights, they can put their fears aside and take action. It’s time to step back from the fear and let logic dictate your actions.

Source: Wall Street’s Psychological Warfare

This from Smart Profits Report:

I’ve been spending the past two weeks intently trying to make sense of the dramatic shifts in our financial markets, the U.S. economy, and even our societal mood.

The news is not good.

In fact, a friend of mine who’s an investment banker summed up the current conditions best, using just one word: “Brutal.”

She reports that her business hasn’t just slowed… it’s at a complete standstill. As a result, she and her colleagues won’t receive any bonus this year.

Meanwhile, the mainstream media continue to rant and rave, almost relishing the situation. A popular radio talk show host is predicting financial Armageddon in the United States, terrorist attacks and pretty much every other type of catastrophe. Frankly, I’m surprised a devastating locust attack wasn’t mentioned.

And I bet that if you talk to people you do business with – from your local shop owner, to gym manager, they’ll tell you that business is off considerably.

Before we dig into the other side of this mess, let me just state for the record that this is a scary time – and things will probably get worse before they get better.

But if you’re one of those folks who are having a difficult time picturing the other side of this mess – a brighter side – you need to realize just how extreme market conditions already are. As the saying goes, “This, too, shall pass” – and the market will eventually return to normal.

Here’s a little perspective – and some common sense…

Perspective Amid The Panic

Take a look at the following facts – ammunition that suggests we’re due for a bull market.

Okay, maybe not today… maybe not next month… maybe not even in the first half of next year. But the numbers below should give investors confidence that it will soon be time to back up the truck and load up on stocks.

#1: Excluding the 1929-1932 crash, bear markets recouped their losses in an average of 22 months.

With the exception of 1929, the largest declines were as follows:

– The 1937 Bear Market: A 50% decline, which lasted 13 months and recovered all its losses in 58 months.

– The 1974 Bear Market: A 43% decline, which lasted 21 months and recovered all its losses in 21 months.

– The 2002 Bear Market: A 45% decline, which lasted 25 months and recovered all its losses in 40 months.

The current bear market is down 52% – from peak to trough – and has lasted for 14 months.

#2: According to Wells Capital Management, between 1984 and 1994, the loan delinquency rate was above today’s level.

In fact, current business loan delinquencies are actually near record lows and consumer loan and credit card delinquencies are at the same level as they were three years ago.

And while delinquencies will rise further as the economy regresses, Wells believes this doesn’t support a depressionary debt collapse.

#3: Volatility is at an all-time high.

During 1929, volatility peaked at 68%, according to Barron’s. In 1987, it peaked at 64%.

The Volatility Index (VIX) recently set an all-time closing high of 80.9 on S&P 500 options expiring in 30 days, which indicates an average daily move of 5%.  That’s an unsustainable amount of volatility and the markets will certainly slow down and become less frenetic.

#4: At the recent lows, the S&P’s annualized 10-year real return was a negative 3.8% – an all-time low. At market lows of 1974, the trailing real 10 year annual loss was 2.7%.

#5: Only 16 stocks in the S&P 500 are positive on the year.

#6: Morningstar tracks over 11,000 equity mutual funds. Every single one is down for the year.

I share these statistics with you, not to show you how dire things are, but to illustrate the excessive fear that investors are experiencing. So what’s the solution?

In Times Of Pain, Go Against The Grain

Market history teaches us that during these kinds of extremes, it’s usually a good time to move in the opposite direction.

I’m not necessarily recommending that you load up on stocks today, because I think we have a little more pain to experience yet.

But with the market so far past its normal limit, I fully expect it to return to a more typical environment. And in order for that to occur, the market must rise significantly.

I believe the next six months will be a once-in-a-generation opportunity to buy assets at irrationally low prices.

Source: The Numbers Don’t Lie… Why A Bull Market Will Arrive Sooner Than You Think