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Although Barron's says recommending stocks at 52-week highs is usually not a comfortable undertaking, the magazine has few hesitations when it comes to National Oilwell Varco. Up some 189% over the past 12 months, Barron's says that at $77 the shares aren't cheap -- but aren't outrageously expensive either. The provider of equipment to oil and gas drillers, which has benefitted from their historic boom, trades in-line with peers at 17.7x 2008 estimates, and Barron's says earnings are pretty transparent for the next couple years. Fueling that growth, analysts say, are strong new orders and backlog as it's been decades since the industry has gone through a new rig-building cycle. Backlog rose to $7.2B from $6.4B while new orders jumped to $1.8B from $1.2B in the second quarter. Third-quarter numbers are due out October 24. Barron's believes there could still be 20% upside to the stock from current levels if the boom continues. Yet, given the heady share price, Barron's suggests investors may want to consider an option-based strategy that would limit the downside risk while still providing substantial returns if the shares rise.

Sources: Barron's
Commentary: National Oilwell Varco: Looking SlickNational Oilwell Varco: Digging For Dollars
Stocks to watch: NOV. ETFs: OIJ, PXJ, XES. Competitors: MDR, SII, WFT

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Source: National Oilwell Varco, Lord of the Rigs - Barron's