Here is one from one of the few areas I know anything about:National Oilwell Varco (NOV)They manufacture capital equipment and spare parts for drilling rigs. They also provide a range of other products and services to the oilfield. There are a few great reasons to like it, long term, nevermind that I see it as undervalued here.Reason #1: They have somehow been allowed to build virtual monopolies in a couple of key business lines. There are several kinds of components for drilling rigs where they have 75% market share or so. These are critical path items for the drilling contractors and they have no desire or incentive to try and save a few bucks from buying from some new entrant. NOV's aftermarket business servicing this equipment and providing spare parts for the equipment also provides a nice annuity stream for them. Margins on the aftermarket are actually stronger than on the new equipment too (think razors and razor blades). There are pretty good barriers to entry here and relatively high switching costs for the customer. They also have a virtual monopoly in tubulars inspection and coating. I know this sounds like the dullest business on the planet, it might actually be true, but it is a very good business. You don't have to know a lot about the oil and gas business to know that it uses a lot of different kinds of pipe. Several different kinds of pipe go into wells (drill pipe, casing, and production pipe) and then pipe is used to transport the oil and gas on the surface (line pipe). This pipe is inspected for faults when it leaves the mill and when it is received at the distribution point. When old pipe is pulled out of a well to be re-used, it is inspected again. Think of it as a toll booth business, where the highway is the global oil & gas drilling business. The company also provides pipeline inspection services, although it has a lesser market share there.Reason #2: The worldwide drilling fleet is in the process of being recapitalized right now. A lot of people seem to think that the recent growth in new rig construction is some sort of bubble that will pop. I do not. Certainly it could slow a bit from its recent pace, but the industry is going to be re-tooling for a long time. Most of the rigs in existence today were built in the early-1980s, if not earlier. The average age of the worldwide offshore rig fleet is 20+ years. Many are closing in on 30 years old. The story is pretty similar for onshore rigs. These rigs will not last forever. They weren't designed to. The rigs are put under too much physical stress to last indefinitely. While the drilling industry has done a decent job of refurbishing existing rigs to extend their lives, this cannot last indefinitely. We are in the early stages of a replacement cycle. But the best news is that if the industry does somehow come to the conclusion that it can continue to put band-aids on this equipment...National Oilwell sells the band-aids. And if the growth in demand for rigs continues, then the picture is just that much better.Reason #3: National Oilwell continues to bring new products to market that are met with high demand. The products themselves are probably too boring to go into a lot of detail about, but suffice it to say that they either improve the economics for the customer or improve safety, or both. Several of these products are already certified homeruns, but have yet to top out in terms of market penetration.Mix in some other nice businesses, a very strong backlog (providing some excellent short- to intermediate-term visibility), and a very strong maangement, and you have a great company.I could also say a lot of good things about Schlumberger (SLB), but I will leave that for another time.
Nice growth over the past six months, but they might be topping out. I like SLB better. My other O&G favs: NE, RIG, ATW, ANW, DO, ROSE, RDC, and my favorite sticker symbol: HERO.Got any insights on those?
I don't know why you would say that about NOV, exactly, but it is a very consensus view right now, so you may be just going on what you have heard.Definitely like NE a lot. Excellent visibility and consistently strong execution. Market seems to be worried about their rig construction projects, but I have gotten a lot of comfort from management on the steps they are taking to mitigate the risk of cost overruns and delays. Their technical staff knows its stuff and knows how to manage projects. They are also a very good takeover candidate for somebody like Seadrill and could be an LBO candidate if management wasn't so deadset against it.DO is okay, as is RIG, though I think RIG is overpriced, relative to names like GSF, DO, and NE. RIG also has been extremely shaky (okay, poor) on its management of its operating costs. And RIG has a very poor track record of execution on new rig construction projects, and they have a few of those going on right now. The company also refuses to do the right thing with its capital structure (meaning add debt to buy back shares or pay out hefty dividends) but is also too scared of its own shadow to take any bold steps to acquire more assets and/or be an agent of further industry consolidation. Overall, I think they run the company like a bunch of old women. I guess I don't think RIG is okay. It could do fine, but I don't see it as outperforming its peers.Don't know a lot about ATW...it's too small for me to trade. Not so keen on RDC, even though it has been a laggard. It is just a consistently terribly run company. The (relatively) new CEO is a lot better than the old one, but he still ain't great. The company's operating costs are just way too high. They also have a lousy habit of taking on some dumb risks on the contracting side. And there investor relations guy is a shady ######## who whispers all of the good news weeks in advance, such that official announcements of good news never move the stock like they should. Actually, he leaks 150% of the good news, which is even worse. Not a lot to like about that stock or company, in my mind.ANW and ROSE are not in my area. Don't know what they are.HERO is an interesting situation. They have made a bold move at consolidating their business in the Gulf of Mexico with their acquisition of THE, but they also paid a hefty premium. And the business in the Gulf of Mexico might be stabilizing, but definitely isn't getting better. On the other hand, its cheap and run by a pretty solid management team (the COO is GREAT), so it could work out okay.Overall, if you own all of these stocks, I'd say you are way too concentrated in the offshore drillers right now. Assuming you like Oilfield Services overall, I would suggest looking at some service/equipment companies and dumping a few of those drillers.
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I was going there at least once a week(put on 10lbs) and was a big advocate. Seriously, line out the door and people standing while they're eating.
Here is their up to date 
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We now have 4 iPods in a household of 2
SAP has the market share
