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Expectations Ride High for This Warren Buffett Darling

By Taylor Muckerman and Joel South - Apr 25, 2013 at 11:03AM

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Warren Buffett is obviously known for his investment prowess. Will his investment in this energy stock polish or tarnish his reputation?

Many oil and natural gas service companies called the fourth quarter of 2012 a trough in the North American market. By all accounts so far during this reporting period, that appears to be especially prescient. International heavyweights Halliburton (HAL 0.39%) and Schlumberger (SLB 0.20%) both witnessed signs that a second half turnaround us likely upon them and the industry as a whole.

What does that mean to Warren Buffett?
Well, a lot, really. For the last couple of quarters, Buffett has been adding stock in National Oilwell Varco (NOV 1.65%) to his portfolio and for what appears to be good reason. The company is modestly priced compared to peers and has its hand in both on-land and offshore drilling markets. Replacing parts on rigs and upgrading global fleets is Varco's business, and there are no shortage of customers. 

With a great management team in place, tack-on acquisitions have created a full-service company that counts the majority of the drilling world as customers. If the conference call on Friday isn't full of positive news, I would be highly skeptical as to why after following the activity during the past week.  

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Stocks Mentioned

National Oilwell Varco, Inc. Stock Quote
National Oilwell Varco, Inc.
NOV
$19.12 (1.65%) $0.31
Core Laboratories N.V. Stock Quote
Core Laboratories N.V.
CLB
$26.02 (0.54%) $0.14
Schlumberger Limited Stock Quote
Schlumberger Limited
SLB
$43.90 (0.20%) $0.09
Halliburton Company Stock Quote
Halliburton Company
HAL
$38.48 (0.39%) $0.15
TechnipFMC plc Stock Quote
TechnipFMC plc
FTI
$8.02 (0.38%) $0.03

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

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