Good morning! The oil price continues to plummet. I was discussing this over lunch with other investors yesterday, and the striking thing we noted is that supposed experts, commentators, economists, etc, pretty much all failed to predict that the price of oil was about to collapse. How can this be? So what exactly is the point of employing such experts, if they fail to predict a gigantic move in the price of oil?

The resources sector is not an area I normally look at (and on the rare occasions that I break my own rule, it nearly always ends in disaster). However, there must be value starting to crop up now, or will do shortly. Over-supply leading to a huge fall in price will inevitably increase demand, same with anything, so the oil price should automatically go back up at some point once demand begins to out-strip supply again. Therefore I'm beginning to research some potential opportunities in the oil services sector.


Begbies Traynor (LON:BEG)

Share price: 43.75p
No. shares: 91.5m (+13.1m new Placing shares to be issued)
Market Cap: £40.0m

Interim results for the six months to 31 Oct 2014 are out this morning. They look lacklustre to me, with adjusted profit down from £2.3m last time, to £1.9m in H1 this year. So not a disaster, but not great either.

The insolvency practitioner says that corporate insolvencies (i.e. its market) were down 16% against last year, so with that in mind the results are actually quite reasonable. Cost control and some small acquisitions have helped. It strikes me as a well run business, owner-managed effectively.

Dividends - the interim divi is maintained at 0.6p. The full year payout is forecast at 2.3p, so that's a generous yield of 5.3%, although note that the bid/offer spread could easily absorb your first year's divis, so it's probably not worth chasing for yield unless you have a good broker who can buy at nearer the Bid price than the Offer price, and/or if you intend holding for the long term.

Outlook - the company today says:

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I like that they specifically say they are trading in line with market expectations.

Valuation - this looks reasonable value, in my view:

548ab30e12b1bBEG_graphics.PNG

Note also that BEG scores highly in Stockopedia's own ranking system, with a StockRank of 93. That gives me some comfort too.