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 (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.