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Is It Time to Get out of National Oilwell Varco?

By Jim Mueller, CFA and Austin Smith - Dec 19, 2012 at 2:00PM

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You should always know when to get out of any stock. Here's how you'll know the time's up for National Oilwell Varco.

In the video below, Fool analysts Jim Mueller and Austin Smith discuss some reasons why investors in National Oilwell Varco (NOV 4.04%) 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.

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Stocks Mentioned

National Oilwell Varco, Inc. Stock Quote
National Oilwell Varco, Inc.
NOV
$16.23 (4.04%) $0.63
Halliburton Company Stock Quote
Halliburton Company
HAL
$30.95 (3.03%) $0.91
BP p.l.c. Stock Quote
BP p.l.c.
BP
$28.23 (3.18%) $0.87
Transocean Ltd. Stock Quote
Transocean Ltd.
RIG
$3.49 (6.40%) $0.21

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

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