The recent market correction and decline in oil prices has created many new buying opportunities in the energy sector. Shares of Tesco Corp. (NASDAQ:TESO) are worth considering on dips. This company designs and
manufactures hydraulic and electric top drives which are used on rigs worldwide. This company also offers services and other products that are used to increase drilling safety and efficiency as well as reduce costs. As a global leader in this field, Tesco has about 2,000 employees in 23 countries.
Tesco has a very strong balance sheet with about $43 million in cash and almost no debt. The stock now looks undervalued after it followed the decline experienced by most stocks in the oil sector. It now trades below book value which is $11.72 per share. It also trades well below the 52-week high of nearly $17 and below analyst price targets. Tesco recently reported solid financial results. For the third quarter of 2012, it announced net income of $9 million or 23 cents per diluted share. This compares favorably to net income of $3.8 million or 10 cents per diluted share, for the third quarter of 2011.
On November 6, analysts at FBR Capital upgraded Tesco shares from "market perform" to "outperform." Analyst coverage and upgrades can increase investor interest in a stock, especially with lesser-known companies like Tesco. With this stock trading for just about 10 times earnings and below book value, any pullbacks could be ideal buying opportunities for investors with a longer-term view.
Here are some key points for TESO:
Current share price: $10.01
The 52 week range is $8.70 to $16.88
Earnings estimates for 2012: $1.05 per share
Earnings estimates for 2013: 97 cents per share
Annual dividend: none
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informational purposes only. You should always consult a financial
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.