I recently read a very well-written and convincing article recommending investors to buy Rowan Companies (NYSE:RDC). The author's investment thesis was based on 3 factors:
1) RDC's forward P/E of 7.28 is the lowest in the S&P 500.
2) Despite the low forward P/E, RDC has "the sixteenth highest 5-year earnings growth rate in the S&P 500" of 30% per year. RDC's expansion towards the ultra deepwater space will spur additional growth, warranting a higher earnings multiple on the stock.
3) The stock is trading below NAV (for simplification, market cap < net PP&E + net cash).
For most stocks, these characteristics would make the company a screaming buy. However, also like most stocks, there is a valid...
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