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After an almost twenty five percent rally in the market over the last six months, bargain stocks are hard to come by. The energy sector still has value as oil prices have gone up faster than oil and oil service stock prices since the first of the year. One stock from that sector that looks underpriced versus its growth prospects is below.

National Oilwell (NYSE:NOV)

7 reasons to own this stock at just over $80 a share:

  • The company has beat earnings estimates for three straight quarters and consensus estimates for FY2012 and FY2013 have risen over the last two months.
  • Earnings are going in the right direction. NOV earned $4.77 in FY2011, and analysts project $5.94 in earnings in FY2012 and $6.88 in FY2013.
  • The company has a growing Brazilian business. It has provided the equipment for the last 7 Petrobras (NYSE:PBR) rigs. It is also rumored to be involved in their recent order for 28 additional rigs.
  • The stock is selling at a low five year projected PEG (.72) and is priced at under 12 times forward earnings.
  • The mean price target for the 22 analysts that cover the stock is over $95. S&P has a "Buy" rating on NOV with a $98 price target.
  • The stock has a solid balance sheet with over $2.5B in net cash on the books.
  • Analysts expect over 20% revenue growth in FY2012 and around 10% in FY2013.
Source: National Oilwell: An Undervalued Stock From The Energy Sector