Weatherford International, Ltd. (NYSE:WFT) shares have dropped along with the markets and the price of oil. With the stock now trading around $12.50, this could be an exceptional buying opportunity for longer-term investors. Here are a few reasons why investors should put aside some of the negative headlines and focus on the many positives that could take this stock higher in the months and years to come:
1) Weatherford is based in Switzerland and it is a global provider of drilling-related services to oil and gas companies. While many U.S. based land drillers are seeing slower growth prospects due to weak natural gas prices, Weatherford is more focused on offshore oil projects which are likely to remain strong.
2) Weatherford shares are oversold and undervalued, as it now trades for about 7 times forward earnings. The stock is now trading for close to half of the 52-week high and historically, these shares have had more upside than downside from current levels. The stock also looks cheap because it is even trading below book value, which is $13.05 per share.
3) Weatherford could be a takeover target, although at least one analyst at Credit Suisse recently stated that the chance of a takeover has been reduced, however, he still feels the stock is undervalued and has a price target of $24 per share. Halliburton (NYSE:HAL) has been considered to be a potential suitor for Weatherford by some analysts because it has the balance sheet strength to pursue a takeover and it might want to increase its exposure to the global offshore drilling projects that Weatherford targets.
4) Insiders have recently been buying shares of Weatherford. On May 14, 2012, Dharmesh Mehta, an officer, bought 5,000 shares in a transaction valued at $62,500. On May 7, 2012, Bernard Duroc Danner bought 4,000 shares in a transaction valued at $54,400. With insiders buying, and Weatherford shares looking undervalued in many other ways, investors could be well-rewarded by buying this stock now.
Here are some key points for WFT:
Current share price: $12.50
The 52 week range is $10.85 to $22.76
Earnings estimates for 2012: $1.21 per share
Earnings estimates for 2013: $1.68 per share
Annual dividend: none
Halliburton Company is a leading oil services company. This stock is also cheap and oversold. Since it has a strong balance sheet, it could be in a position to make an acquisition.
Here are some key points for HAL:
Current share price: $30.60
The 52 week range is $27.21 to $57.77
Earnings estimates for 2012: $3.51 per share
Earnings estimates for 2013: $3.97 per share
Annual dividend: 36 cents per share which yields 1.2%
Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.