Helmerich & Payne Inc.
) reached a 52-week high of $79.56.15 on Nov 18. In fact, the
Tulsa, Oklahoma-based contract drilling services provider has
seen its stock price climb some 20% during the past six months.
Despite this price appreciation, we remain optimistic about the
firm's near-term prospects, supported by its superior and
diversified drilling fleet, continued strong operating
performance led by an efficient management team, and an
investor-friendly financial policy.
These factors are reflected in Helmerich & Payne's Zacks Rank
#2 (Buy), implying that it is expected to outperform the broader
U.S. equity market over the next one to three months.
Why the Bullishness?
Helmerich & Payne is a major land and offshore drilling
contractor in the western hemisphere, having the youngest and
most efficient drilling fleet. The company, which has surpassed
earnings estimates in each of the last 6 quarters, specializes in
shallow to deep drilling in oil and gas-producing basins of the
U.S. and in drilling for oil and gas in international locations.
We believe that Helmerich & Payne's technologically-advanced
FlexRigs are the key to its success, helping to increase its
count of active rigs and maintain relatively strong daily-rate
margins even during times of market uncertainty. The company's
proprietary FlexRig design makes the rigs move faster than
conventional rigs, drill quicker and more efficiently, and allows
for a safer operating environment. As such, these are better
suited for the new demands of the exploration business and,
therefore, command higher dayrates and utilization than rigs from
other land drillers.
Helmerich & Payne - which counts
Nabors Industries Ltd.
) as one of its major competitors - recently approved a raise in
its quarterly cash dividend to 50 cents per share ($2.00 per
share annualized), representing an increase of more than 200%
over the previous payout. The significant dividend hike not only
highlights the company's commitment to create value for
shareholders but also underlines Helmerich & Payne's strong
cash generation capabilities.
Another positive in the Helmerich & Payne story is the
quality of its client base, which mostly includes
well-capitalized oil majors or large independents.
Other Stocks to Consider
In addition to Helmerich & Payne, one can look at
Matador Resources Co.
SM Energy Co.
) as good buying opportunities. These U.S. upstream energy
operators, which sport a Zacks Rank #1 (Strong Buy) have solid
secular growth stories with the potential to rise significantly
from the current levels.
HELMERICH&PAYNE (HP): Free Stock Analysis
MATADOR RESOURC (MTDR): Free Stock Analysis
NABORS IND (NBR): Free Stock Analysis Report
SM ENERGY CO (SM): Free Stock Analysis Report
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