For investors, National-Oilwell Varco, Inc. (NYSE:NOV)’s stock has been mired in some of the same trends that have held many exploration and production companies back. As prices have plunged, many producers have had to mothball projects or cut back on production in hopes of waiting out the downturn, especially in the natural gas area. That’s a big part of why Varco has only managed to see share-price gains of just about 5% annually since early 2008 — a big letdown from the nearly 500% gains the stock saw in the preceding five years. Still, with substantial revenue growth and double-digit profit margins, Varco is still a growth stock, and its current valuation gives prospective shareholders a compelling argument to buy now.
Finally, one area where Varco is looking to improve the world is in its assistance in helping dry areas of the world drill for safe drinking water. By providing more than 17,000 pumping stations throughout Africa as well as in India and the Philippines, Varco’s NOV Mono project works with charitable organizations to provide the clean water necessary to improve school attendance, medical care, and agricultural productivity.
The case against National Oilwell Varco
Simply by being in the oil and gas industry, National-Oilwell Varco, Inc. (NYSE:NOV) draws criticism from those who argue that helping oil and gas producers simply perpetuates reliance on unsustainable fossil fuels. With its Health, Safety, and Environmental Management System, though, Varco seeks to help its customers operate safely without threatening health or creating environmental concerns.
Clearly, the company is also vulnerable to a drop in energy production activity. That’s a big part of its fairly weak stock performance lately, but with all signs pointing to greater levels of activity around the world, such short-term concerns will likely give way to longer-term supporting trends.
Drill for profits the National Oilwell Varco way
As a key player behind the scenes of the oil and gas industry, National Oilwell Varco plays a vital role in the energy products we all rely on. Even though National-Oilwell Varco, Inc. (NYSE:NOV) didn’t end up making the Best 25 list, its success in such an important area argues convincingly that the company deserved the distinction of being one of companies that made it into the group of 40 or so finalists in our selection process.
The article Is National Oilwell Varco One of the Best Companies in America? originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends and owns shares of National Oilwell Varco. It also owns shares of Petroleo Brasileiro.
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