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5-Star Stocks Poised to Pop: Seadrill

By Brian D. Pacampara | More Articles
April 18, 2011 | Comments (2)

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, offshore driller Seadrill (NYSE: SDRL  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Seadrill's business and see what CAPS investors are saying about the stock right now.

Seadrill facts

Headquarters (Founded) Hamilton, Bermuda (1972)
Market Cap $13.14 billion
Industry Oil and gas drilling
Trailing-12-Month Revenue $4 billion
Management

CEO Alf Thorkildsen (since 2008)

CFO Esa Ikaheimonen (since 2010)
Return on Equity (Average, Past 3 Years) 17.3%
Cash/Debt $1.35 billion / $9.59 billion
Dividend Yield 7.8%
Competitors

Noble (NYSE: NE  )

Transocean (NYSE: RIG  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 99.7% of the 328 members who have rated Seadrill believe the stock will outperform the S&P 500 going forward. These bulls include KnockoutMouse and billney.

Late last year, KnockoutMouse noted that Seadrill "has a modern fleet of rigs and pays a great dividend but has taken on a huge debt load to do it." Our CAPS member concludes: "If oil prices keep rising then Seadrill's deep water gamble will generate enough income to bring their balance sheet into order."

Currently, Seadrill even sports a forward P/E of 10.6. That represents a slight discount to other contract drillers Diamond Offshore Drilling (NYSE: DO  ) (13.7), Noble (10.9), and Transocean (11.2).

CAPS member billney elaborates on the Seadrill bull case:
 

Oil companies will be doing everything possible to minimize risk and utilizing the most sophisticated and new drilling rigs. ... Deep water around the world will still be exceptionally profitable for the service companies and Seadrill's advantage in owning the newest technology will serve them very well over the next decade.
 

What do you think about Seadrill, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Diamond Offshore, Noble, and Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 18, 2011, at 12:46 PM, koil wrote:

    Nice dividend ,if oilprices stay above 80 this company will do great over the course of the year.

    Only de high debt load is something to take notice of.

    The growth has staggering ,possible gone to fast , but keep in mind who thought that apple could keep up their growth for the last decade .

    Keep sitting and accumulating the dividends .can be a profitable thing going forward.

  • Report this Comment On April 19, 2011, at 10:09 PM, energysystems wrote:

    Their fleet utilization ratio is top of the industry. Their fleet is the youngest by leaps and bounds(average of 9 years old), but the real interesting part, half of their fleet is 3 years or younger, and they've been divesting away from their older rigs. They are building rigs at breakneck pace, but with such a high utilization rate(97%), they are cutting down their debt quite quickly. I recently initiated a position in SDRL, I wish I'd known about them sooner! I think in a few years I'll look back with a big grin for this one.

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Related Tickers

5/25/2012 4:02 PM
SDRL $35.03 Up +0.10 +0.29%
Seadrill, Ltd. CAPS Rating: *****
RIG $43.14 Up +0.01 +0.02%
Transocean, Inc. CAPS Rating: *****
NE $33.75 Down -0.30 -0.88%
Noble Corp CAPS Rating: *****
DO $60.56 Up +0.49 +0.82%
Diamond Offshore D… CAPS Rating: *****

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