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5 Oil Drilling Stocks to Consider

Oil drilling stocks are quite popular in the market. This is because they are considered to be safer and more stable than most other options. The oil industry is larger than other industries all over the world. But investors still need to be careful while investing in oil drilling stocks. In this article I will be evaluating five of these stocks that seem to be good investment options at the moment. The five oil drilling stocks are:

Transocean (RIG): The current trading price of this stock is close to $50 per share. The price has been steadily increasing and experts predict that it will continue to do so. The 52-week trading range is between $38 and $86 per share approximately. Market capitalization at the current price is almost $18 billion and the average trading volume is more than 6 million. Earnings per share (EPS) and the price-to-earnings (P/E) ratio are currently in negative territory due to a loss suffered by the company recently. Dividend yield is 6.4% and there are almost 350 million shares outstanding in the market. Debt-to-equity ratio is 0.53 and the beta has been calculated at 1.06. This means that the company is relatively stable and the risk of investing in this stock is very low.

Experts suggest that investors should hold the stock. It is said that the company’s diverse fleet will give it a competitive edge in the market. The current situation of the stock however, is a source of concern for existing as well as potential investors. This is one of the high yielding stocks which are currently having some trouble. In my opinion, investors who wish to buy this stock should wait for the company to stabilize itself and recover from its losses. Once the situation improves, it has the potential to offer high returns to its investors.

Diamond Offshore Drilling (DO): The current price at which this stock is trading is slightly above $66 per share. Some experts believe that the price will remain unchanged but others suggest that it will increase. The 52-week trading range is between $51 and $81 per share approximately. Market capitalization is close to $9 billion and the average trading volume is nearly 2 million at current price. Earnings per share (EPS) are almost $7 and the price-to-earnings (P/E) ratio is close to 10. The last dividend paid by the company was 75c per share and the dividend yield is close to 1%. There are approximately 140 million shares outstanding in the market. Debt-to-equity ratio is 0.35 and the beta is calculated at 0.93. This means that the company is quite stable and the stock is a safe investment too. Sales and income are growing steadily and the profit margins are almost 29%.

Experts have given this stock a rating of 9 out of 10. It is said that 2012 would however, be a year of slower growth due to the five-year testing of the company’s rigs. This will have an impact on share prices as well. In my opinion, it would be a good option for income investors to sell their stocks when the time is right for them. But those investors who want to build diversified portfolios and want to minimize risk could buy and hold these shares for long-term growth and income.

Petroleo Brasilerio (PBR): The stock is currently trading in the market at a price of more than $29 per share. Some experts in the industry believe that the price will remain unchanged while others suggest that it will fall. The 52-week trading range is between $20 and $43 per share approximately. Market capitalization is more than $183 billion and the average trading volume is almost 16 million at current price. Earnings per share (EPS) are nearly $4 and the price-to-earnings (P/E) ratio is close to 8. The last dividend paid by the company was 22c per share and the dividend yield is 4.35%. There are close to 7 billion shares outstanding in the market. Debt-to-equity ratio is 0.45 and the beta is calculated to be 1.43. This indicates that the company is stable and the stock is not very risky either. It also has the potential to offer better returns than the market average. Net profit margin is 16% and there is positive growth in sales and income.

This stock was recently downgraded by analysts to Equalweight and the price targets were revised from $38 to $33. It would be viable option to invest in this company as it offers high yields and risk is relatively lower.

Vantage Drilling (VTG): The current trading price of this stock is just above $1 per share. The price is relatively stable and has not been fluctuating much. However, some experts predict that it could fall. The 52-week trading range is between $1 and $3 per share approximately. Market capitalization at this price is close to $878 million and the average trading volume is nearly 2 million. Earnings per share (EPS) and price-to-earnings (P/E) ratio have fallen recently due to an income loss. Debt-to-equity is 1.77 and the beta has been calculated at 1.98. This means that there is some risk involved with this investment. There are almost 291 million shares outstanding in the market and experts suggest that the stock is a viable option to buy.

It is being said that this stock has been undervalued and is trading below its book value. The management team at Vantage is a strong one and they also have a new fleet.

The concern for investors is that the debt load is relatively higher and there could be a slight loss in earnings in 2012. However, the stock is trading under its book value of more than $2 per share. It is therefore a good option to buy as it has potential to bounce back. Once it does recover, investors will be able to benefit from capital gains. This stock will be helpful in building a diversified portfolio and investors would need to manage the risk so that they can make profits in near future.

ENSCO (ESV): The current trading price of this stock is more than $56 per share. The price has been fluctuating constantly and experts predict that it will keep doing so. The 52-week trading range is between $37 and $57 per share approximately. Market capitalization at this price is close to $13 billion and the average trading volume is almost 3 million. Earnings per share (EPS) are more than $2 and the price-to-earnings (P/E) ratio is 25. Dividend yield is nearly 2.5% and the last dividend paid by the company was 35c per share. There are almost 231 million shares outstanding in the market. Debt-to-equity is 0.48 and the beta is calculated at 1.28. This means that the debt is well managed and the company is stable.

The stock is not very risky and has the potential to offer higher returns than the market average. Experts have given this stock a rating of 7 and suggest that it is definitely a good option to buy. This stock is a good investment option for investors who do not want high risk and prefer steadier returns.

About the author:

Dividend King
I am primarily an investor interested in creating passive income streams through dividends. I focus on finding and analyzing dividend paying stocks, MLPs and REITs that are a good fit for income investors.

I practice Judaism and my faith is very important to me. I visit family in Israel once a year, but I am educated and work in the United States where I hold an MBA and a bachelor’s in English. I am a patient man, enjoy wine but am not a connoisseur, and I listen more than I speak.

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