Everyone loves getting a deal on things, even if its something that they don't necessarily need. The idea of getting things cheap just gives you that warm and fuzzy feeling that you are doing something responsible with your money, and what better place to display your inner miser than buying beaten-down stocks that sell at a major discount.
So we asked some of our biggest cheapskate analysts to dig through the bargain bins to find a few companies that may be gems under all that other junk. Here's what our Scrooge-like investors found:
Matt DiLallo: When a stock falls more than 70% it's either a screaming value or heading toward the abyss of bankruptcy. I think Seadrill (NYSE:SDRL) is the former in this case as the offshore driller is taking action to ensure its survival during the current downturn in the oil market. This is why I think the stock has the potential to draw the attention of the value investing crowd this year, especially if oil prices do begin to recover in the second half of 2015 as many are now predicting.
I see five reasons why Seadrill's stock could catch the eye of value investors in the year ahead.
- It has some of the best offshore drilling assets in the industry. Not only is its fleet among the youngest in the industry, but its exposed to the premium segments of the drilling market.
- Thanks to its asset-backed business the company is now trading at a very compelling value with its stock trading well below book value.
- The company also has a rock-solid contract backlog that will help it pull through the current storm in the market. As of the end of last quarter 91% of its floater fleet was under contract for 2015 along with 74% of its jack-up fleet. These contracts provide it with the cash flow it needs to stay afloat as the market turmoil rages on.
- Seadrill is now focused on improving its balance sheet since the company slashed its dividend in an effort to reduce debt and keep its funding costs low.
- Finally, the company sees the value in its stock and is planning to buy back 10% of its outstanding shares.
Jason Hall owns shares of ArcelorMittal and Seadrill. Jason also has an uncanny ability to read the "price per ounce" information on grocery store tags. He estimates this saves him at least $3.85 every month. Maybe more in July.
Matt DiLallo owns shares of Seadrill, which he bought when it was a high flying income stock. Now that it's a value stock, the cheapskate in him is itching to buy more.
Tyler Crowe owns shares of National Oilwell Varco and Seadrill and has never seen a "buy one, get one free" deal he doesn't like. Now if they would only make that offer with stocks.
The Motley Fool recommends National Oilwell Varco and Seadrill. The Motley Fool owns shares of National Oilwell Varco and Seadrill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.