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Adding to My Largest Energy Holding

The company's booked backlog provides excellent visibility for the next several years.
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I have consistently said that National Oilwell Varco (NOV) is my favorite energy name.

Given the emerging trends in North American shale, management has said that we could see a U.S. rig count of 2,200 to 2,300 in the next two years, up from 1,957 today.

Overseas markets tend to lag the North American markets by about two years, and management is also very bullish about the growth prospects there. In Russia alone, management has said it is possible to approach 200 to 250 land rigs.

Deepwater is also a great growth opportunity, and in jack- ups, 82% of the installed base is currently at least 20- years old. They will need to be replaced, and National Oilwell Varco is perfectly positioned in that respect.

The shares are down from $92 as the commodity prices have corrected, but with $10 billion in backlog set to grow 18% to 20% over the long term and the stock trading at a 9% discount to the group and an 11% discount to its biggest competitor, Cameron International (CAM) , National Oilwell Varco is a buy at $71.

Could the stock fall further as commodities continue to correct? Sure, but the booked backlog provides excellent visibility for the next several years, and I am willing to wait it out as the company delivers.

I am going to add 100 shares to this core holding, and it will be my largest energy holding at 2,300 shares, for 5.03% of the portfolio.

Regards,

Jim Cramer

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DISCLOSURE: At the time of publication, Cramer was long National Oilwell Varco.

Send email to james.cramer@thestreet.com.