Morgan Stanley just came out with a list of 30 companies that have higher probabilities than their brethren of being acquired in 2013. Two energy companies made the list. They are profiled below.
Atwood Oceanics (NYSE:ATW) is an offshore drilling contractor, engages in the drilling and completion of exploratory and developmental oil and gas wells. The company owns a fleet of approximately 11 mobile offshore drilling units.
4 reasons ATW has upside from $51 a share:
- The stock is cheap at under 8x forward earnings.
- Analysts expect over 25% revenue growth for both FY2013 and FY2014. ATW sports a cheap five year projected PEG (.53).
- Insiders are holding on to their shares. There has been minor net insider buying over the last six months.
- ATW sells in the bottom third of its five year valuation range based on P/S, P/CF and P/B. Credit Suisse has an "Outperform" rating and has a $60 price target on the shares.
Nabors Industries (NYSE:NBR) operates as a land drilling contractor worldwide. The company markets approximately 500 land drilling rigs for oil and gas land drilling operations.
4 reasons NBR is a buy at under $16 a share:
- The stock sells at just 79% of book value.
- NBR sports a five year projected PEG of under 1 (.78). It also trades at a reasonable forward PE of 12.
- The stock was upgraded from "Hold" to "Buy" at Deutsche Bank in late November. S&P also has a "Buy" rating on Nabors.
- NBR is trading near the bottom of its five year valuation range based on P/B, P/E, P/S and P/CF.