The oil services sector has been hit hard over the past ninety days. However, the sector is deeply oversold and numerous bargains are available for patient investors. One stock that I, analysts and Cramer all like here due to its low valuation, strong growth prospects and robust dividend yield is Ensco (ESV).
6 Reasons there is significant value in ESV at $43 a share:
- The stock is cheap at 90% of book value and 9 times operating cash flow.
- The company pays a 3.5% dividend, one of the highest in the oil services sector.
- The stocks sells for just 6.3 times forward earnings, a discount to its five year average (9.3).
- The market seems to be giving the stock not enough credit for its growth prospects. ESV has a five year projected PEG of just .56 and analysts expect over 15% sales growth in FY2013.
- The 30 analysts that cover the stock have a median price target of $66.50 a share on Ensco, approximately a 50% gain from current prices.
- The stock has bounced from just under these levels previously (See Chart).
Disclosure: I am long ESV.