If there is one segment that could be a solid shot for long-term investors it is oilfield services, and one of the leading indicators is the rig count of working oil and gas wells in the United States. While the second-quarter numbers may not be the huge catalyst for an immediate jump, the coming third quarter and last half of 2016 could provide a stronger than expected rig count increase.

A very in-depth new Merrill Lynch report is cautiously optimistic on the oilfield services industry. The report notes that heading into earnings season, the analysts expect more investors will focus on commentary from the top companies on the rate and strength of the industry’s recovery.

Merrill Lynch is bullish on the North American levered companies. These three rated Buy look outstanding.

Halliburton

This company has ticked higher since the deal with Baker Hughes fell through due to regulators concerns, but it is still down almost 50% from highs printed two years ago. The Jefferies team recently added the company to the Franchise Picks portfolio. Halliburton Co. (NYSE: HAL) is one of the world’s largest providers of products and services to the energy industry.

The company serves the upstream oil and gas industry throughout the life cycle of the reservoir, from locating hydrocarbons and managing geological data to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field.

The oil field giant announced last year a $1 billion investment to develop huge potential oil fields in Ecuador and it has entered into a long-time deal with Petroamazonas, an Ecuador-based company involved in the exploration and development of the country’s oil reserves.

Top Wall Street analysts see the end of the Baker Hughes deal as removing uncertainty on the company, and they also think that the company still has acquisition possibilities, which could help expand the business footprint. The company just posted solid second-quarter results, with revenues and earnings that beat expectations.

Halliburton investors receive a 1.6% dividend. Merrill Lynch has a $53 price target, and the Wall Street consensus target is lower at $49.12. The shares closed Tuesday at $44.99.

Helmerich & Payne

This company primarily operates as a contract drilling company in South America, the Middle East, and Africa. Helmerich & Payne Inc. (NYSE: HP) provides drilling rigs, equipment, personnel and camps on a contract basis to explore for and develop oil and gas from onshore areas and fixed platforms, tension-leg platforms and spars in offshore areas. Its contract drilling business operates through three reportable segments: U.S. Land, Offshore and International Land.

The company posted earnings that many felt came in much better than expected. At last report, the company’s U.S. Land rig segment, which is its largest business, had a utilization rate of 31%, compared to 68% this time last year. The International Land operations also saw utilization rates decline to 38%. What is slightly surprising, though, is that the average margin for a rig in use increased between this quarter and the same time last year.

Merrill Lynch feels that the company is one of the best positioned for the U.S. land recovery, and the team also cites the strong balance sheet and the sector-leading dividend.

Helmerich & Payne investors receive a 4.21% dividend. The Merrill Lynch price target is a massive $75, and the consensus price objective is $60.24. Shares closed Tuesday way above that level at $66.58.

Nabors Industries

This company provides drilling and rig services. Nabors Industries Ltd. (NYSE: NBR) offers rig instrumentation, optimization software and directional drilling services. It also provides completion, life-of-well maintenance and plugging and abandonment of a well.

In addition, the company markets approximately 466 land drilling rigs for oil and gas land-based drilling operations in the United States, Canada and approximately 20 other countries worldwide; approximately 445 rigs for land well-servicing and workover services in the United States; 98 rigs for land well-servicing and workover services in Canada; 42 rigs for offshore drilling operations in the United States and internationally; and seven jackup units and components of trucks and fluid hauling vehicles.

Merrill Lynch has stated in the past that concerns over the company’s balance sheet are way overblown, and at current levels the shares are pricing in too modest of an industry recovery. The firm also cites the international exposure, which it sees as providing more stability.

Nabors investors receive a 2.53% dividend. The Merrill Lynch price target is $14. The consensus price objective is $11.95. Shares closed Tuesday at $9.53.

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Three top picks for investors to consider. It may be smart to buy a partial position here and see if the market doesn’t come in some during earnings season. With a plethora of potential market moving events on the horizon, caution makes sense now.

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