Bought Some NOV

I have bought shares of NOV (thanks to reader CP for putting me on to NOV). They actually make safety equipment for oil rigs among other things and are down 9% today in sympathy with the sector. The valuation is reasonable at less than ten times earnings net of cash. This is just a bounce play but I wanted to buy something that has value in case I am early.


Anonymous said...

wouldn't NOV be in trouble as well when their equipment fails?

CP said...

My understanding is the BOP on Deepwater Horizon was built by competitor CAM not NOV.

Any new BOP regulations are incredibly bullish for these equipment makers.

How is MGM worth 20x EBITDA and oil services that don't even operate in the Gulf only 3-4x?

I bought NOV calls today.

Tsachy Mishal said...

Its also interesting that only 27% of revenue comes from the US.

blogger said...

Interesting one, this NOV.

On my side I am long FP (Total S.A.), a big French oil company.

Current market cap is 87.3 billions Euros.
Book value is 58 billion Euros, and earnings are annual pace of 9 billions Euros.
Also a bargain with little downside risk.

It seems the whole oil industry is currently largely undervalued and as low as February 2009. A great way to play the 'Peak oil' thing.

Tsachy Mishal said...

The ADR symbol for Total SA is TOT. Trades at about 7 times this years projected earnings and has a 6.6% dividend. Thanks.

blogger said...

Yes, you are correct:
- ticker is TOT in NYSE (in USD then)
- ticker is EPA:FP if you wish to buy it in Euro on the Paris stock exchange