Is Noble Energy the Perfect Stock?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Noble Energy (NYSE: NBL  ) fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
  • Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
  • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let's take a closer look at Noble Energy.


What We Want to See


Pass or Fail?


5-tear annual revenue growth > 15%




1-year revenue growth > 12%




Gross margin > 35%




Net margin > 15%



Balance sheet

Debt to equity < 50%




Current ratio > 1.3




Return on equity > 15%




Normalized P/E < 20




Current yield > 2%




5-year dividend growth > 10%








Total Score


6 out of 10

Source: Capital IQ, a division of Standard & Poor's. Total score = number of passes.

With six points, Noble Energy is poised to make a run at perfection. The driller is trying to expand at a crucial moment for the energy markets, but if all goes well, then it could be well poised to profit from continued strength in the industry.

As a drilling company with operations in the Gulf of Mexico, Noble Energy got hit hard by the BP oil spill last year. After nearly a year of downtime in the region, Noble Energy got the first permit of 2011 to restart a deepwater well off the coast of Louisiana.

Now, a lot will depend on how much the company can make up for lost time in the Gulf. Lately, weather threats have caused problems, as Tropical Storm Lee caused rivals Hercules Offshore (Nasdaq: HERO  ) , Transocean (NYSE: RIG  ) , and Seadrill (NYSE: SDRL  ) to evacuate their production platforms over the Labor Day weekend. But yesterday, Hercules and ATP Oil & Gas (Nasdaq: ATPG  ) both jumped more than 10% on news that activity would resume, and Noble Energy also saw more modest gains.

Yet Noble isn't confined to the deep water. Along with Anadarko Petroleum (NYSE: APC  ) and Chesapeake Energy (NYSE: CHK  ) , the company also has significant acreage in the Niobrara region of Wyoming and Colorado. Despite some uncertainties about the region, players are optimistic about its prospects.

For Noble to reach perfection, it will need to see success in every aspect of its business. If oil prices stay relatively high and gas prices recover, then that would help get the company on its way.

Keep searching
No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

Click here to add Noble Energy to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Finding the perfect stock is only one piece of a successful investment strategy. Get the big picture by taking a look at our "13 Steps to Investing Foolishly."

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned in this article. The Motley Fool owns shares of Transocean. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy and Hercules Offshore. 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 has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (4)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1550338, ~/Articles/ArticleHandler.aspx, 10/4/2015 8:00:48 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated 1 day ago Sponsored by:
DOW 16,472.37 200.36 1.23%
S&P 500 1,951.36 27.54 1.43%
NASD 4,707.78 80.69 1.74%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/2/2015 4:02 PM
NBL $31.62 Up +1.51 +5.01%
Noble Energy, Inc. CAPS Rating: ***
APC $64.11 Up +3.16 +5.18%
Anadarko Petroleum… CAPS Rating: ***
ATPAQ.DL $0.00 Down +0.00 +0.00%
ATP Oil & Gas Corp CAPS Rating: ***
CHK $7.89 Up +0.68 +9.43%
Chesapeake Energy CAPS Rating: ***
HERO $0.00 Down +0.00 +0.00%
Hercules Offshore,… CAPS Rating: **
RIG $13.56 Up +1.06 +8.48%
Transocean CAPS Rating: ***
SDRL $6.15 Up +0.26 +4.41%
Seadrill CAPS Rating: ****