This group represents a solid collection of investment options that combine reasonable valuations, high growth, rock-solid balance sheets, and even a recurring dividend payments. Despite these compelling valuations, only Halliburton Company (NYSE:HAL) has outperformed the S&P 500 this year. While this outperformance has made Halliburton the most “expensive” of this group of companies from a P/E and PEG perspective, the company trades at a very reasonable valuation given the expected growth rate of 17% going forward.
Schlumberger Limited. (NYSE:SLB) and Baker Hughes Incorporated (NYSE:BHI) are also expected to grow 17% per year over the next five years. Based on TTM P/E and PEG, both companies present opportunity for investors looking beyond the short-term volatility of the oilfield services industry and the market as a whole.
Meanwhile, National Oilwell Varco remains the most attractively valued company on this list in terms of TTM P/E, PEG, and even debt-to-equity ratios.
The long term thesis is intact
While there is valid concern regarding the recent slowdown in North American onshore drilling activity, there is no indication that there is any permanent demand reduction for onshore and offshore drilling. As a result, National Oilwell Varco, Schlumberger Limited. (NYSE:SLB), Baker Hughes Incorporated (NYSE:BHI), and Halliburton Company (NYSE:HAL) are all poised for continued success.
Despite a share price that has remained flat so far in 2013, National-Oilwell Varco, Inc. (NYSE:NOV) is doing what it has done successfully for the past decade by continuously expanding its leadership position both organically and through acquisitions. In addition to a solid position as a market leader, the stock that is very cheaply valued, has a rapidly rising dividend, and recently received a vote of support from Berkshire Hathaway. In combination, there are more reasons to be excited about the long-term opportunity of investing in National Oilwell Varco today than there were at the beginning of the year. As a result, I maintain that this stock remains a “Top 10 Stock” for the long term and not a “strong sell” as advocated by Zacks.
The article National Oilwell Varco: Strong Sell or Top 10 Stock? originally appeared on Fool.com and is written by Brian Shaw.
Brian Shaw owns shares of Berkshire Hathaway and National Oilwell Varco. The Motley Fool recommends Berkshire Hathaway, Halliburton, and National Oilwell Varco. The Motley Fool owns shares of Berkshire Hathaway and National Oilwell Varco. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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