December 19, 2012
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.