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Fear & Greed Trader
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INDEPENDENT Financial Advisor / Professional Investor- with over 30 years of navigating the Stock market's "fear and greed" cycles that challenge the average investor. Investment strategies that combine Theory, Practice and Experience to produce Portfolios focused on achieving positive... More
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  • Great Rotation Cont'd - Growth & Yield With ESV 0 comments
    Mar 21, 2013 1:49 PM | about stocks: ESV

    Following my theme for what I believe will be rotation into fundamentally sound companies that have lagged in this rally, married with my incessant search for yield, I suggest we take a close look at Ensco- ESV.

    Ensco, headquartered in London, U.K., is one of the world`s largest offshore drilling companies. Their fleet consists of 76 offshore rigs, which includes seven ultra-deepwater drillships, 13 well positioned semisubmersibles, seven moored semisubmersibles, and 49 jackups. The company's fleet is strategically located in some of the best domestic and international oil and gas markets.

    The entire oil service sector for the most part has muddled along here in 2013, with recent weakness being noted in the last month. There has been a slew of recent negative headlines regarding companies in the sector, most of which has centered around soft demand in the land segment of operations. However , the Offshore fundamentals appear to be very strong. ESV's recent earnings report was stellar as they reported 4th quarter 2012 earnings of $1.37 on Feb. 20th. This beat the $1.29 consensus of the analysts that cover the stock.

    Earnings estimates come in around $6.25 for the full year giving ESV a forward looking PE of approx. 9. Mgmn't increased the annual dividend on Mar. 1 to $2.00, yielding 3.5% at it's current price.

    The Daily chart below indicates the flat performance I mentioned as the shares are at the same level they began 2013. Support seems solid as it rides along it's 200 day MA.

    (click to enlarge)

    ESV represents value here, and the 3.5% yield should provide additional price support for the near term. I recommend purchase at these levels to initiate a position for long term gains. Ensco displays evidence of a company that will provide both growth and income that will attract buying attention as investors take profits in stocks that are overbought. Analysts may also join the party as they search for recommendations in stocks that are not "stretched".

    As with my recommendation on AAPL, it may be a perfect place to "hide out" if we get a market correction.

    Full Disclosure , I purchased shares for my account yesterday at $57.41.

    Check back for Updates.....

    Disclosure: I am long ESV, RIG, NOV.

    Additional disclosure: Stocks for Income means just that at - New Ideas, No Hype, No Agenda

    Themes: Rotation, Yield, Growth, Oil Service Stocks: ESV
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