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5-Star Stocks Poised to Pop: Seadrill

By Brian D. Pacampara, CFA - Updated Apr 6, 2017 at 10:21PM

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Market-trouncing returns could be written in this 5-Star.

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, offshore driller Seadrill (NYSE: SDRL) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Seadrill's business and see what CAPS investors are saying about the stock right now.

Seadrill facts

Headquarters (Founded) Hamilton, Bermuda (1972)
Market Cap $13.14 billion
Industry Oil and gas drilling
Trailing-12-Month Revenue $4 billion
Management

CEO Alf Thorkildsen (since 2008)

CFO Esa Ikaheimonen (since 2010)

Return on Equity (Average, Past 3 Years) 17.3%
Cash/Debt $1.35 billion / $9.59 billion
Dividend Yield 7.8%
Competitors

Noble (NYSE: NE)

Transocean (NYSE: RIG)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 99.7% of the 328 members who have rated Seadrill believe the stock will outperform the S&P 500 going forward. These bulls include KnockoutMouse and billney.

Late last year, KnockoutMouse noted that Seadrill "has a modern fleet of rigs and pays a great dividend but has taken on a huge debt load to do it." Our CAPS member concludes: "If oil prices keep rising then Seadrill's deep water gamble will generate enough income to bring their balance sheet into order."

Currently, Seadrill even sports a forward P/E of 10.6. That represents a slight discount to other contract drillers Diamond Offshore Drilling (NYSE: DO) (13.7), Noble (10.9), and Transocean (11.2).

CAPS member billney elaborates on the Seadrill bull case:
 

Oil companies will be doing everything possible to minimize risk and utilizing the most sophisticated and new drilling rigs. ... Deep water around the world will still be exceptionally profitable for the service companies and Seadrill's advantage in owning the newest technology will serve them very well over the next decade.
 

What do you think about Seadrill, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

SeaDrill Limited Stock Quote
SeaDrill Limited
SDRL
Transocean Ltd. Stock Quote
Transocean Ltd.
RIG
$2.92 (0.00%) $0.00
Noble Corporation plc Stock Quote
Noble Corporation plc
NEBLQ
Diamond Offshore Drilling, Inc. Stock Quote
Diamond Offshore Drilling, Inc.
DO

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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