RigNet Inc. (NASDAQ: RNET) is beginning to blip on investors’ radar. It is being discovered as among the potentially cheap oil stocks after Brexit fears triggered a selloff across board. But with Britons having made their decision to divorce the EU, bargain hunting has ensured and RNET is grabbing attention.
To understand why investors are beginning to show love for RigNet Inc. (NASDAQ: RNET), you have to remember the company’s position in the energy industry. RNET is a provider of a range of technology solutions for drillers. Its technology services are vital for both onshore and offshore rig management. In that position, the company stands to gain from a return to active drilling following a lengthy lull triggered by fallout in crude prices.
Oil price recovery
Prices of crude oil have tended to recover in the recent months after nearly two years of decline. A global oil supply glut was responsible for the massive pullback in crude prices. But events such as the Canadian wildfire, unrest in Nigeria’s oil belt and strike of oil workers in Kuwait helped reduce supply of oil to the global market. As such, the supply glut has appeared to be easing and there is hope that drillers could restart their rigs after a lengthy period of idling.
Adding to the sanguine prospects in the energy industry are recent reports from the U.S. that have continued to show declining crude oil stockpiles.
Improving investor sentiment
Although crude oil prices started to show signs of recovery, rising above $50 a barrel market that has been elusive for many months, the Brexit issue sent many investors for the exit door in energy stocks. But with the Brexit dust now settling, promising energy stocks such as RigNet Inc. (NASDAQ: RNET) are coming sharply into view.
Oil demand trends and RigNet Inc. (NASDAQ: RNET)
Oil investors also appear to be drawing confidence that these are periods when demand for oil tends to pick up in the U.S. and Asian markets. As such, there should be an increase in drilling activities to meet the potential seasonal demand and RigNet Inc. (NASDAQ: RNET) stands to benefit from the resumption of drilling by its clients.