Anybody want to comment on this? Seems interesting:
Helmerich & Payne
Is there a major oil driller that has never experienced a losing year?
How about one that acts as a mini sector fund of energy stocks? Robert Howard,
Editor of Positive Patterns, says Helmerich & Payne (NYSE - HP, 255/16) can
answer "yes" to both questions.
"Helmerich & Payne is a player all across the globe and it has the
usual clients . . . the big oils. The company believes the most promising
future is in two places: overseas and offshore.
During all the bad years in the drilling business, Helmerich & Payne
has never had a losing year! This is especially impressive if you consider what
the drilling business has been through the last 15 years. They have been
terrible times.
We are excited about the future of Helmerich & Payne. This company also
owns some very handsome stock positions. At current market prices, the
Helmerich & Payne portfolio is worth around $500 million, giving the company
$10 per share worth of value in stock positions. This portfolio has almost
doubled in value in the last 16 months, beating the S&P averages handily.
When you buy Helmerich & Payne, it is like buying a mutual fund; a sector fund
of energy stocks. We have solid evidence that management is very good at
picking stocks in a field it knows very well. With the debt-free balance sheet,
it adds to the muscle and attraction.
Helmerich & Payne owns significant amounts of real estate in downtown
Tulsa, eighteen different buildings, and over 500 acres of prime land.
The properties are 96% rented, and the Tulsa real estate market is strong. We
would guess that the real estate is worth about $100 million. This
is a value of $2 a share. So, with stock holdings of $10 a share, and
real estate estimated at $2 a share, you are actually paying about $13
a share for the operations of Helmerich & Payne. We think that is dirt
cheap for such a quality company.
We see this as a stock that will give you a very good performance over
the next three-to-five-year period. Energy stocks are not very market sensitive
right now. If the market swoons, we doubt if the oils will follow.
Cash flow is strong. You can buy the shares for about eight times this
year's cash flow. We would suggest aggressive buying in the $28 area.
We believe Helmerich & Payne has the right stuff to be a major player
in the energy markets all over the globe. There is support in the $23-to-$28
area. Once clear of the $33 area, we expect the shares to move much higher and
not look back."
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