Morgan Stanley’s Highest Conviction Stocks: Top 20 Stocks To Buy

2. Schlumberger Limited (NYSE:SLB)

Share Price Upside: 45%

Number of Hedge Fund Investors In Q2 2024: 67

Schlumberger Limited (NYSE:SLB) is the biggest oilfield services provider in the world. This allows it to generate substantial revenues, and the industrial nature of its business means that future cash flows and revenues are visible through its order pipeline and backlog. Additionally, Schlumberger Limited (NYSE:SLB)’s competitive position is bolstered by the fact that it counts some of the biggest oil companies in the world such as Petrobras and Saudi Aramco as its customers. Schlumberger Limited (NYSE:SLB) however remains vulnerable to dropping production activities, especially like the one the oil industry has risked recently due to weak Chinese economic growth depressing the oil market. However, the firm’s $3.9 billion in cash and equivalents and trailing twelve month free cash flow of $4.3 billion provide it with ample room to keep investors happy during downturns by conducting share buybacks and dividend payouts.

Artisan Partners mentioned Schlumberger Limited (NYSE:SLB) in its Q4 2023 investor letter. Here is what the firm said:

“We have stringent criteria for business quality, which is particularly important in commodities sectors as these businesses do not control the underlying commodity prices, which can be volatile. We expect Schlumberger to continue to successfully navigate market volatility and deliver on its free cash flow and profit margin growth objectives from combination of activity growth and pricing gains. The stock has been among our top contributors since we initiated our position in December 2020.”