A Fast-Growing Energy Company You Shouldn't Miss

If you were to guess which stocks might be among the fastest growers of 2013, you'd probably name Amazon.com (Nasdaq: AMZN  ) , Google, and Apple. And, of course, you'd likely be correct. Those companies come in at Nos. 1, 3, and 6, respectively, on Goldman Sachs' list of estimated fast growers.

It's unlikely, however, that many of you would pick Schlumberger (NYSE: SLB  ) to be among the 10 fastest growers. And yet, that outstanding energy services company comes in at No. 9. In light of expected energy trends over the next several years, investors might want to take a closer look at Schlumberger.

Goldman's crystal ball
Business Insider recently published the latest equity chart book from Goldman Sachs, which included estimates for the fastest-growing companies in the S&P 500 for 2013, according to revenues (excluding financials and utilities).

Company

2013 Revenue Growth Estimate

Amazon.com 28%
priceline.com (Nasdaq: PCLN  ) 21%
Google 18%
Anadarko Petroleum 15%
eBay 14%
Apple 14%
United Technologies (NYSE: UTX  ) 14%
Freeport-McMoRan Copper & Gold (NYSE: FCX  ) 14%
Schlumberger 13%
MasterCard 12%

Source: Business Insider.

Clearly, technology and Internet-related companies are expected to do well. But I was intrigued to see two large, well-established energy companies on the list of top growers -- Anadarko Petroleum and Schlumberger. The current environment, with oil prices firmly above $100 a barrel, seems very favorable to a wide array of energy companies, and I think investors should be paying very close attention to this space.

An expert's outlook for energy
The energy expert Daniel Yergin recently told management consulting firm McKinsey that growing demand from Asia has led to $100 oil and increased volatility in energy markets. He believes that the world will be using a lot more energy in 2030, but that the "mix will still be dominated by oil, natural gas, and coal."

Over the next several years, he sees three big trends in the energy space:

  1. The Western Hemisphere will continue to develop its own resources and will become less dependent on the Middle East.
  2. The U.S. and China will increasingly compete for sources of energy.
  3. Iran's quest for nuclear weapons will cause considerable instability in the Persian Gulf.

Ultimately, Yergin sees increasing energy prices in the near term, which will result in a "great bubbling of innovation across the energy spectrum."

Can you pronounce Schlumberger?
Schlumberger, which provides a wide variety of services to the oil and gas exploration and production industries, is one company that should do very well in the environment envisioned by Yergin. It's far and away the leader in R&D among its competitors, and has been able to deliver solid operating profits and returns on capital in recent years.

My colleague Dave Meier is so impressed with this company that he ranked it No. 3 among his favorite energy stocks. Fool analyst Bryan White also likes the company, since he feels that it is "one of the few companies with the ability to integrate technology, from seismic all the way to well completion, in one integrated package." As demand for oil and gas intensifies in the coming years, a company that makes it easier to extract oil and gas from wells should do very well indeed.

Schlumberger is just one of three companies that our analysts have written about in our latest report, titled "3 Stocks for $100 Oil." To learn more about the other two, have a look at the free report. You can get it for free here.

John Reeves owns shares in Google and Apple. You can follow him on Twitter where he goes by @TMFBane.

The Motley Fool owns shares of Freeport-McMoRan Copper & Gold and Amazon.com. Motley Fool newsletter services have recommended buying shares of priceline.com, Amazon.com, and Schlumberger. 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 Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (16)

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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 March 07, 2012, at 6:37 PM, crca99 wrote:

    "Can you pronounce Schlumberger?"

    I was hoping for answer.

  • Report this Comment On March 07, 2012, at 6:47 PM, ficklevoter wrote:

    People in the TX oil patch say, "Slumberjay." Just reporting...

  • Report this Comment On March 07, 2012, at 8:28 PM, TradewindRider wrote:

    I used to work for them. It is best pronounced "Slum-behr-zhay", accent on the first syllable. Think French.

    And no, I would never think of them as a growth stock, either.

    Jeff

  • Report this Comment On March 07, 2012, at 9:39 PM, TMFAimeeD wrote:

    One of the Fool's Top 5 Energy Stocks for 2012, too. Why wait until 2013 when you can live in the now?

    http://www.fool.com/investing/general/2011/12/22/our-top-5-e...

    Up over 5% so far this year.

    Aimee

  • Report this Comment On March 07, 2012, at 9:51 PM, TMFBane wrote:

    Nice pick by David Lee Smith! Thanks for sharing the link, Aimee.

  • Report this Comment On March 07, 2012, at 9:51 PM, TempoAllegro wrote:

    This is a great list, and I'm satisfied that a couple of my current holdings are included. Still, I have some questions and observations.

    Let's consider AAPL and AMZN first. AAPL has a growth rate listed here that is less than half of AMZN. Currently AMZN's market cap is one-sixth the size of AAPL, yet if you compare AAPL's PE of 15 to AMZN's PE of 134, which means AMZN's PE is about 9 times higher, we see something's amiss. Ask yourself - is it more likely for AAPL's PE to go up or for AMZN's to come down?

    So my problem with AMZN and APPL is that as companies, certainly I have used Amazon's products and services much more through the years. But I have always viewed the stock as too pricey, as it is now. For Apple, I view the stock as a deal now, but do not currently own any of their products because I think the products are too pricey. Maybe I should forget Graham and embrace Lynch, and then dump my AAPL shares and load up on AMZN? For some reason I'm having trouble pulling the trigger on that...

    I love SLB, but wonder if their high R&D expense will continue to be justified. I also wonder if we can find simpler, better-run companies - for example KMP. Any other bright ideas for the energy space?

    About UTX, I am intrigued. What about HON, which should be their major competitor?

    And how can we discuss MA without V? I've heard V is more popular as a card in the USA and MA in Europe, but perhaps that is not true anymore. To me the major difference is that MA has high insider ownership, and I think that, along with their excellent CEO, makes it a better buy. Can anyone explain why V should be a better investment than MA?

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