Energy stocks and oil service equities are getting hit hard today as oil is down almost $3 so far in Wednesday's trading. This provides the perfect opportunity to pick up National Oilwell Varco (NYSE:NOV) on the pullback. This rig manufacturer is well positioned to take advantage of the robust demand in deep water rigs and a growing backlog. It is receiving an increasing amount of attention from analysts recently.
Recent positives for NOV:
- Goldman Sachs just resumed coverage on NOV with a "Buy" rating and a $97 price target on the shares.
- William Blair initiated the shares as an "Outperform" on September 17th.
- Even TheStreet reiterated its "Buy" rating last week.
- Consensus estimates for FY2013 have moved up 7 cents a share over the last month.
4 additional reasons NOV is a good growth play at under $80:
- As the end of the last quarter, the company had grown its backlog 67% over the end of the second quarter of FY2010. Backlog growth is accelerating.
- Earnings are moving up at a rapid clip. The company made $4.77 a share in FY2011 and is on track for just under $6 a share in FY2012. Analysts have it earnings close to $7 a share in FY2013.
- The company should also post revenue growth of over 35% this year and in the solid double digits next year. The stock sports a five year projected PEG of under 1 (.85).
- The company has beat earnings estimates for five straight quarters and trades at just over 11.5 forward earnings, a discount to its five year average (13.2). The median analyst price target by the 22 analysts that cover the firm is $95 a share.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NOV over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.