There's a lot to like about Seadrill (SDRL +0.00%); but, in this video, Jim Mueller gives us three things to watch for as warnings signs to sell. First, Seadrill is expanding its rig fleet rapidly and incurring significant debt doing so. Second, utilization rates need to at least stay level, and preferably increase. If rates start to decrease, this could be trouble for the company. Third, Seadrill is ordering new rigs without a guarantee that they will be used once the rigs are built. If oil prices drop or demand for deep rigs declines, Seadrill could be in for a rough time, and investors should seriously consider selling.
Is It Time to Sell Seadrill?
By Jim Mueller, CFA and austin smith – Feb 15, 2013 at 2:00PM
NYSE: SDRL
SeaDrill
Three ways you'll know it's time to sell Seadrill.
About the Author
Advisor for Motley Fool Options, Future of Entertainment, and Energy Insider, Jim learned how businesses are run while putting his Ph.D. in biochemistry to use at a small biotech company. Jim started investing over two decades ago, initially making the same mistakes most people do. He changed careers to work at the Fool, where he's improved his investing process while developing an appreciation for the importance of investor psychology and taking the long-term view. He received the CFA charter in 2015.