Oil and Energy stocks have done tremendously well over the last few years and investors are wondering out loud if they still have room to run or are many of them overpriced? The answer of course lies in your own due diligence but Nabors Industries (NBR, $39.53, up $0.72) is pushing all-time highs despite a 12% decline in Q1 profits.
The other day I mentioned that Transocean (RIG, $157.30, down $0.10) was the biggest offshore oil driller in the world. Nabors happens to be the world’s largest land oil driller with operations in North America, Africa, Latin America, and the Middle East.
Even with the decline in 1Q profits that were reported in April, the company did $0.81 versus $0.76 which is what Wall Street had expected. Revenue for the quarter was $1.32 billion while analysts had expected revenue of $1.28 billion. The results from North America businesses was what weighed in on the decline of its profits but this was offset to a degree due to the strength of business outside North America. Nabors’ international businesses posted a 37% gain for the quarter.
The stock was at 52-week lows in January when it was trading in the low $20’s. However, judging by the success it has had so far this year, investors have been building positions in Nabors’ as many believe the drilling stocks have lagged their counterparts.
The stock closed just below $40 on Thursday and looks ready for “blue-sky territory”. We know that drilling is declining in North America but on the international front, new markets like Mexico and Russia are look promising for Nabors, and the company continues to dominate in the Middle East and Africa. Since international contracts are generally multi-year deals Nabors will not only benefit for the continues demand for oil but natural gas as well.