Oil has slid downward for some time but is now heading back higher. As the world economies begin to expand more and more they are going to need oil for moving products around the world. Despite the drop in oil price Noble Energy did well and was still profitable. Now they have a lot of potential with increased revenue as the price of oil heads higher.
Noble Corporation is an offshore drilling operation that is located primarily in the North Sea. They are a British company whose stock trades on the NYSE.
There are a lot of reasons why I like this stock. They are an oil company and I am quite bullish on the price of oil. Crude, in the United States, has been sitting at $51 for a moment. However, I believe that is short-lived and as the economy of the United States continues to expand, oil prices will advance further. I can very comfortably see the price of oil above $75 by the end of the year 2017. That would increase revenue by 50% in a linear world, although I can be forgiving. Plus, as the United States continues its expansion the pull for other regions, such as the EU and China will be enough to begin the process of bringing these economies into expansionary territory.
Here is a look at the numbers that are most important with the company, with gross revenue, pre-tax profit and earnings-per-share, respectively:
2011: 2,695.8 469.3 1.46
2012: 3,547.0 770.9 2.05
2013: 4,234.3 2,003.7 3.05
2014: 3,232.5 1,048.2 0.03
2015: 3,352.3 1,590.6 2.06
At first glance, the one thing that stands out is the drop in revenue from 2013 - 2014. That was a 50% haircut in gross profits. But, it came off of only about 25% drop in revenue. That was the period that saw a great deal of selling in the oil business along with a tight slowing in economic growth around the globe. Still, the company was profitable and the very next year, impressively, with hardly any revenue growth, improved their gross profits by 50% as well as improved their earnings-per-share significantly. This is a company that responded quite effectively to the economic turmoil that they saw. This shows that leadership is adept in difficult times, a valuable asset.
Back to what I mentioned in the beginning regarding the economic expansion. Growth in the company’s earning has been steady, save for the slowdown and selling in the price of oil. Given the ability to continue its expansion, oil is positioned to move much higher. And, this company would need only take rigs that have been taken off line back online. that wold mean that there would not be any real capital investment necessary to see additional revenue since the oil producing structures are already in existence. That is a key aspect of where this company currently sits. There is a lot of expansion capabilities in revenue, and that would come inexpensively.
But, and here is one of the things that I like the most about this company, the stock is trading at a mere $7.05 per share. That means you are getting this stock at well below what is average for the stock market. When I saw this price I had o continue to look to find where the “catch” was. I could not find any other than oil stocks have been beaten down so much there is no real juice in them. That, at first becomes a detriment. You will not see too much in the way of stock increase if no one is buy-in gah stock. However, it is my firm belief that sentiment will change and that this stock will hit levels that put it at 15 times earnings.
This is a long term hold. You would want to buy into this and hold on as the economy expands and the price of oil goes higher. Noble Energy is a great addition to your portfolio.
|This story from Macroaxis reported on January 20, 2017 contributed to the next trading day price decline.The trading delta at closing time to the next closing price was 2.16% . The trading delta at closing time when the story was published to the current price is 14.98% .|