Morgan Stanley believes the negative catalysts underlying its bearish thesis on National-Oilwell Varco, Inc. NOV 8.88% have played out, and the firm has upgraded the stock from Underweight to Overweight. Analyst Ole Slorer believes the market should shift its focus to the company’s $4 EPS potential.
“We estimate that at the 2014 peak, EBIT from new offshore rigs was $1.1bn, or 25% of total & ~$2 of the $6.08 in EPS in 2014,” Slorer explains. “We thus see $2.50-3.00 as midcycle earnings by late 2018 and over $4 by 2020.”
The fact that National-Oilwell has underperformed its oil services peers but has exhausted its negative catalysts makes the stock a top contrarian pick in Slorer’s eyes. He sees a solid balance sheet and the potential for strong earnings momentum going forward.
Morgan Stanley predicts…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!