Is It Time to Get out of National Oilwell Varco?

In the video below, Fool analysts Jim Mueller and Austin Smith discuss some reasons why investors in National Oilwell Varco (NYSE: NOV  ) might consider selling the stock.

Investors should always be aware of potential red flags marking their investments: Three flap above NOV. The first is the volatility of oil prices. NOV's share price is tied to the price of oil. If investors are not comfortable with that level of volatility, they should consider selling the stock. Secondly, as oil rigs push the limits of drilling in deeper water, the risk of accidents rises. If an accident occurs and involves one of NOV's products, it could hurt the company financially and damage its reputation. And finally, NOV owns 60% of the market in which it operates. That means it has little room to extend. So while its position remains dominant, growth becomes more difficult to achieve.

Although it does face risks, National Oilwell Varco is perhaps the safest investment in the energy sector. This company is poised to profit in a big way; its customers are both increasing the number of new drilling rigs as well as updating an aging fleet of offshore rigs. To help determine if NOV is a nice fit for your portfolio, check out our premium research report with in-depth analysis on whether NOV is a buy today. For instant access to this valuable investor's resource, simply click here now and claim your copy today.


Read/Post Comments (7) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On December 19, 2012, at 2:15 PM, bobspeldbackwrds wrote:

    Full disclosure: I am long National Oilwell Varco. Do the writers of this piece really think those 3 red flags they mentioned are red flags? The risk of an offshore oil platform accident involving one of their products? There are product defect risks in hundreds if not thousands of publicly traded companies. I don't think the Warren Buffets of the world consider such a thing. What if a Boeing 757 crashes at takeoff? What if a can of Pepsi makes someone sick? A 60% share of the market is a red flag? Sounds like they have the table set to become a cash cow with pricing power. Volatility in the oil market? Can't one diversify away that risk using various means? Slow day around the Motley Fool bullpen?

  • Report this Comment On December 19, 2012, at 2:44 PM, Risky88 wrote:

    I dont know about a plane crashing, but look at MNST and the hit they have taken since few people out of millions have gotten sick or died.

    Fact is the bp spill was a big deal and the pubic was furious about it and took it all out on bp.

    long as well

  • Report this Comment On December 19, 2012, at 3:02 PM, bobspeldbackwrds wrote:

    You are reinforcing my point. Any publicly traded company can be involved in a tragic event, like BP. That is a risk for any firm. If the risk of blowback from a potential accident involving a product is one that prevents investors from owning a company, then nobody would ever buy a stock. Isn't that why we diversify? It doesn't happen to every company. But it does happen to some. My point is the risk of a negative outcome due to a product defect that NOV is exposed to is not a red flag. This article says it is a red flag. That is wrong. It is a risk. But it is a risk borne by every other company. Therefore, is it a reason to own nothing?

  • Report this Comment On December 19, 2012, at 4:08 PM, Gomez79 wrote:

    Yea, ridicule valor investor.

  • Report this Comment On December 19, 2012, at 6:05 PM, lenmac08 wrote:

    Same guy last week had the same video saying how good the company was citing 60% market share as a good thing. All of the sudden he's taking a 180 degree reversal?????? Something smells fishy!!??

  • Report this Comment On December 20, 2012, at 1:27 PM, spokanimal wrote:

    This is a "teaser" for an advertisement.

    Motley Fool didn't used to do this... they are going downhill.

    I recommend Seeking Alpha as a less "commercialized" publication.

  • Report this Comment On December 22, 2012, at 12:19 PM, TDRH wrote:

    Stock is flat but our global oil based economy is not going anywhere. The real threat is a decline in utililization or rig count triggered by a slowing global economy/demand for oil. It was a Cameron Bop in the gulf and that company bounced back.

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