Energy services stocks will give some investors motion sickness, as producers rush to build equipment and start drilling in fat times and pull back sharply (or go out of business altogether) when oversupply drives down prices. That makes it very hard to recommend a stock like National Oilwell Varco (NYSE:NOV) as a long-term hold, as this stock can drop 20% or more in a single month. Still, with an aging production fleet out there and big plans for further production expansion from the major oil and gas companies, now may not be a bad time to hold these shares.
Orders Flowing in the Second Quarter
NOV's reported performance for the second quarter was not the big story. Sure, 12% sequential revenue growth is not bad, and the company saw 18% sales growth in its rig technology business. Likewise, 16% sequential growth in operating income is a solid performance and those improving margins are encouraging against a backdrop of higher input costs.
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