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Featured Advisors
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Tuesday February 14, 2012
by Lou Gagliardi, editor Cabot Global Energy Report We continue to seek stocks that can outperform on a relative basis and provide dividend support to protect the downside. Offshore driller Seadrill Limited ( SDRL) combines both positive catalysts. It is the largest offshore drilling company in the world, with a market cap of roughly $17 billion.
Seadrill, like most of the industry, is in rapid growth mode seeking to capitalize on the explosive worldwide need for safer, better-quality rigs in the post-BP Gulf of Mexico oil spill era, while providing capability for drilling in more difficult and deeper waters (and capturing higher crude prices). Seadrill has also recently moved into the Brazilian market looking to capitalize on client Petrobras’ explosive rush to develop its sub-salt discoveries. The speed of the company’s growth has stretched Seadrill’s balance sheet, and the company is highly leveraged with debt-to-capital of 59% (57% including cash). But we like the long-term outlook for this sub-sector, as exploration continues to move further offshore to meet demand. In short, Seadrill is expected to benefit from elevated crude prices; the stock has good upside potential; and it offers a high dividend yield of 8.5% ($3.02 per share). Competitive Advantages - Seadrill has one of the more modern fleets in the industry, the world’s second largest fleet of ultra-deepwater rigs and the largest fleet of jack-up and tender rigs.
- Rapid growth—from five rigs in 2005 to about 60 rigs currently.
- The only major offshore drilling company with tender rigs in its fleet—a growing global niche market providing cost-efficient and flexible production drilling (as opposed to exploratory or developmental drilling).
- Seadrill is capitalizing on increasing demand for tender rigs and tight supply by re-signing rigs at increasingly higher rates.
- With 14 rigs under construction (just under one-fourth of the current fleet size), Seadrill is well positioned to support its growth plans.
Financial Metrics - Net income has increased at a compound rate of roughly 46% since 2006 and revenues have grown nearly 31% per annum since 2008.
- 24% ROE through 9/30/2011, compared to 21% ROE for full-year 2010.
- A four-year dividend compound growth rate of 36% since 2008.
- Seadrill has an order backlog of over $13 billion, with major multinationals such as ExxonMobil, Chevron, Petrobras, Statoil and Total among its clients.
- Despite creeping cost pressures throughout the energy industry, Seadrill has maintained EBITDA margins at 72% year-to-date through 9/30/2011, in the same period in 2010 and in full-year 2010.
- Trading near its 52-week high, I like SDRL’s growth prospects and its high dividend yield.
And the short-term strain on the balance sheet is justified by the growing need for newer, safer, higher-quality rigs as older rigs are replaced. Increase purchases on any stock pullbacks. Price target: 42 to 43 over the next three to six months. Learn more about this financial newsletter at Lou Gagliardi's Cabot Global Energy Report.Related articles:
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News Flash
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Monday May 20, 2013
Express Scripts: Obamacare buy |
by J. Royden Ward, editor Cabot Benjamin Graham Value Investor
I am attracted to healthcare stocks because the confusion surrounding “ObamaCare” has held healthcare stock prices back. I think Express Scripts (ESRX) is very likely to shine in 2013.
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Monday May 20, 2013
Hodges: High conviction funds |
by Walter Frank, editor MoneyLetter
Over the last two months, Hodges Fund (HDPMX) has made a strong run to the top echelons of our domestic stock fund rankings. And one of its siblings, Hodges Small Cap (HDPSX) has been within the top decline of the small blend category from 2009 through last year, and is in the top 20% this year.
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Friday May 17, 2013
United Natural: A play on Whole Foods |
by Mark Skousen, editor Hedge Fund Trader Alert
We’ve recommended Whole Foods Market (WFM) from time to time, and the stock has moved up sharply in the past three years, but I’d like to suggest an alternative -- one of Whole Foods’ primary suppliers, United Natural Foods (UNFI).
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Thursday May 16, 2013
Timing expert eyes India |
by Sy Harding, editor Street Smart Report
The money flow and momentum reversals in India's Bombay Index have now been enough to trigger buy signals on intermediate-term indicators. With this new buy signal, we have added a position in the iShares India 50 ETF (INDY) to our portfolio.
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Wednesday May 15, 2013
Value investor goes with Guess |
by Charles Mizrahi, editor Hidden Values Alert
Guess?, Inc. (GES) is a holding in our special situation portfolio; its strong product quality has created brand name recognition and a loyal consumer following.
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Wednesday May 15, 2013
MGAM: Bingo, lotteries, casinos |
by Jim Oberweis, Jr., editor The Oberweis Report
Multimedia Games Holding Company (MGAM) makes innovative gaming systems for Native American and commercial casino operators in North America, lottery operators, and charity and commercial bingo operators.
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Tuesday May 14, 2013
Fidelity expert: Bowers' bond bets |
by Jack Bowers, editor Fidelity Monitor & Insight
If you’ve been worried that the bond market might take a big hit, you can relax. Indeed, while bond funds may lag stock funds over the next 5-10 years, they still have a decent shot at keeping up with inflation, and they remain an excellent way to cut risk in a blended portfolio.
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Tuesday May 14, 2013
Tesla: 'Out of the ball park' |
by Timothy Lutts. editor Cabot Stock of the Month
Tesla (TSLA), our previously featured Stock of the Month and our top stock pick for 2013, knocked the ball out of the park in its latest quarter. The company exceeded analysts' expectations on all counts: cars sold, revenues, earnings, gross margins and more.
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Monday May 13, 2013
5 ways to speculate on Cuba |
by Jim Powell, editor Global Changes & Opportunities Report
With the death of Hugo Chavez in March, and Venezuela’s economic decline, the heavily subsidized oil lifeline is likely to be cut or sharply reduced. I think the resulting energy squeeze will force Cuba to allow greater foreign trade and investment.
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Monday May 13, 2013
Big gains in nanotechnology? |
by Doug Fabian, editor Making Money Alert
The nanotechnology niche focuses on very small, even microscopic, technology. Nanotech has produced technological developments in medicine (lasers), electronics (ink jet systems) and biomaterials (chemical and bio-detectors).
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