Seeking Alpha
Value
Profile| Send Message| ()  

Interested in gaining exposure to oil and gas drilling companies? Do you prefer companies with strong profits? Do you prefer investing in stocks that analysts have weighed in on? If the answer is yes, here are some interesting ideas to get you started.

The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue

The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.

We first looked for oiland gas drilling stocks. We then screened for businesses that have strong bottom line profitability (Net Margin [TTM]>10%)(1-year operating margin>15%). We then screened for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We did not screen out any market caps.

Do you think these stocks deserve to trade higher? Use our screened list as a starting point for your own analysis.

1) Concho Resources, Inc. (CXO)

Sector:Basic Materials
Industry:Oil & Gas Drilling & Exploration
Market Cap:$9.57B
Beta:1.23

Concho Resources, Inc. has a Net Margin of 28.64% and Operating Profit Margin of 53.27% and Analysts' Rating of 2.10. The short interest was 2.21% as of 05/15/2012. Concho Resources Inc., an independent oil and natural gas company, engages in the acquisition, exploration, and development of oil and natural gas properties in the United States. Its principal operating areas are located in the Permian Basin region of southeast New Mexico and west Texas. As of December 31, 2011, the company had estimated proved reserves of 386.

2) Helmerich & Payne Inc. (HP)

Sector:Basic Materials
Industry:Oil & Gas Drilling & Exploration
Market Cap:$4.84B
Beta:1.21

Helmerich & Payne Inc. has a Net Margin of 17.75% and Operating Profit Margin of 28.27% and Analysts' Rating of 2.40. The short interest was 4.79% as of 05/15/2012. Helmerich & Payne, Inc. engages in the contract drilling of oil and gas wells. It provides drilling rigs, equipments, personnel, and camps on a contract basis to explore for and develop oil and gas from onshore areas and fixed platforms, tension-leg platforms, and spars in offshore areas. The company conducts land drilling operations primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Mississippi, Pennsylvania, Utah, Arkansas, New Mexico, Alabama, Montana, North Dakota, and West Virginia; offshore drilling operations in the Gulf of Mexico, offshore of California, Trinidad, and Equatorial Guinea; and international land drilling operations in Ecuador, Colombia, Argentina, Mexico, Tunisia, and Bahrain.

3) Legacy Reserves Lp (LGCY)

Sector:Basic Materials
Industry:Oil & Gas Drilling & Exploration
Market Cap:$1.33B
Beta:1.04

Legacy Reserves Lp has a Net Margin of 39.19% and Operating Profit Margin of 28.41% and Analysts' Rating of 1.60. The short interest was 0.34% as of 05/15/2012. Legacy Reserves LP, an independent oil and natural gas limited partnership, engages in the acquisition and development of oil and natural gas properties primarily located in the Permian Basin, Mid-Continent, and Rocky Mountain regions of the United States. As of December 31, 2010, it owned interests in producing oil and natural gas properties in 370 fields in the Permian Basin, Texas Panhandle, Wyoming, Oklahoma, and several other states; operated 2,132 gross productive wells; and owned non-operated interests in 3,227 gross productive wells, as well as had proved reserves of approximately 52.8 million barrels of crude oil equivalent.

4) Atwood Oceanics, Inc. (ATW)

Sector:Basic Materials
Industry:Oil & Gas Drilling & Exploration
Market Cap:$2.61B
Beta:1.47

Atwood Oceanics, Inc. has a Net Margin of 39.25% and Operating Profit Margin of 45.35% and Analysts' Rating of 2.20. The short interest was 6.86% as of 05/15/2012. Atwood Oceanics, Inc., an offshore drilling contractor, engages in the drilling and completion of exploratory and developmental oil and gas wells worldwide. The company owns 10 mobile offshore drilling units located in the U.S.

5) Crestwood Midstream Partners LP (CMLP)

Sector:Basic Materials
Industry:Oil & Gas Drilling & Exploration
Market Cap:$1.16B
Beta:0.89

Crestwood Midstream Partners LP has a Net Margin of 20.00% and Operating Profit Margin of 34.75% and Analysts' Rating of 2.10. The short interest was 0.78% as of 05/15/2012. Crestwood Midstream Partners LP engages in gathering, compressing, treating, processing, and transporting natural gas primarily on the Barnett Shale formation of the Fort Worth Basin in north Texas. The company conducts its operations through its Cowtown System, Lake Arlington Dry System, and Alliance Midstream Assets, as well as the Fayetteville Shale and the Granite Wash plays. As of December 31, 2010, it managed approximately 500 miles of natural gas gathering pipelines.

6) MarkWest Energy Partners LP (MWE)

Sector:Basic Materials
Industry:Oil & Gas Drilling & Exploration
Market Cap:$3.93B
Beta:0.96

MarkWest Energy Partners LP has a Net Margin of 12.38% and Operating Profit Margin of 21.93% and Analysts' Rating of 1.70. The short interest was 0.61% as of 05/15/2012. Markwest Energy Partners, L.P., together with its subsidiaries, engages in the gathering, processing, and transportation of natural gas in the southwest, Gulf Coast, and northeast regions of the United States.

Company profiles were sourced from Finviz. Financial data was sourced from Google Finance and Yahoo Finance.

Source: 6 High-Earning Oil And Gas Drilling Stocks With Buy Ratings