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National Oilwell Varco, Inc. (NOV)

From StreetAuthority Market Advisor: “National Oilwell Varco, Inc. (NOV, NYSE) has been unstoppable lately, gaining ground in...

National Oilwell Varco, Inc. (NOV, NYSE) has been unstoppable lately, gaining ground in 10 of the past 11 weeks. On July 1, the shares were sitting at a 52-week low of $32.18. On November 10, they bulled their way to a 52-week high of $59.73. That’s a powerful 85% advance in just four months. But this rally is far from overextended. Even after the meteoric ascent, the stock is trading at 14 times earnings, a 20% discount to its historical average and just half the industry norm. Even if the tailwind of rising crude prices dies down, the shares would still be sharply underpriced.

“NOV is the world’s leading supplier of parts and equipment for land and offshore drilling rigs. ... The firm benefits whenever buoyant oil prices trigger a spike in activity. But orders still pour in even when there aren’t many new drilling projects underway. So far this year, spare parts for existing rigs have generated over $3.0 billion in revenues, while consumables (which must be replenished frequently) chipped in another $1 billion. Still, the company isn’t exactly sitting around waiting for repair and maintenance calls. Last quarter, order bookings coming in were larger than product shipments going out, another way of saying the firm had more business than it could handle. ... Rising global rig counts and the continued refurbishment of aging shallow-water jack-up rigs both present attractive opportunities for NOV. ... As long as prices are high enough for new projects to be economical, National Oilwell Varco will remain busy. I see further gains of 20% to 30% on the horizon and consider NOV a strong candidate for my Portfolio.”

Nathan Slaughter, StreetAuthority Market Advisor, 11/11/10

Chloe Lutts Jensen is the third generation of the Lutts family to join the family business. Prior to joining Cabot, Chloe worked as a financial reporter covering fixed income markets at Debtwire, a division of the Financial Times, and at Institutional Investor. At Cabot, she is a contributor to Cabot Wealth Daily.