Oil prices have plunged 30% since the beginning of June and now stand at six-year lows. Not surprisingly, this situation has caused many big investors, including none other than Warren Buffett, to dump oil stocks such as National Oilwell Varco (NYSE:NOV).

In fact, according to Berkshire Hathaway's second-quarter 13-F filing, Berkshire has now completely dropped the premier manufacturer of oil rigs and drilling equipment from its portfolio. With all due respect to the Oracle of Omaha, I disagree with this decision and believe there are four reasons now might be the perfect time for long-term investors to buy shares of this venerable blue chip. 

National Oilwell Varco is historically undervalued

Metric Current 20 Year Historical Average
PE Ratio 9.7 24.1
P/OCF Ratio 7.4 14.6
Dividend Yield 4.7% 1.3%

Sources: Yahoo! Finance, Fastgraphs.

As this table shows, any way you want to look at it -- price to earnings, price to operating cash flow, or dividend yield -- National Oilwell is trading at a significant discount to its usual long-term valuations. 

NOV Dividend Yield (TTM) Chart
NOV Dividend Yield (TTM) data by YCharts

In fact, though the company only started paying a regular dividend in March 2010, the recent share-price collapse has caused the dividend yield to soar to an all-time high. 

When a company so integral to the oil and gas industry that experts jokingly say its ticker stands for "No Other Vendor" suddenly sports a near 5% yield, dividend investors should seriously consider giving it another look. 

Management thinks shares are cheap
Three months after the oil crash began, in September 2014, National Oilwell's management began an aggressive campaign of buying back stock. As Chairman, President, and CEO Clay Williams explained:

This authorization comes after several months of careful consideration and reflects the company's strong financial condition, and the confidence that we have in our future business outlook. We are pleased that the continued execution of a solid business model has resulted in strong operating cash flow that enables us to continue to invest in strategic growth opportunities, while simultaneously returning capital to shareholders through both a healthy dividend and a share repurchase program. 

In fact, in the past quarter alone National Oilwell bought back $447 million worth of its shares, bringing the company's total buyback to almost $2.6 billion -- 10.4% of shares outstanding -- out of its $3 billion buyback authorization.

With management so confident in the undervaluation of its shares, long-term investors should consider following National Oil Well's lead. That's especially true since the share price has experienced a 48% haircut since the buyback authorization was announced.

NOV Chart
NOV data by YCharts

Domestic drilling equipment may have bottomed
During its most recent earnings call, management told investors that the company's North American units are seeing price stabilization. 

While prices remain low and management expects third-quarter sales to remain tepid, Williams is confident in an eventual recovery in new order backlog. That's because the current rate of new rig equipment orders is "not sustainable because they (oil producers) support ongoing operations by depleting their inventories of consumables and equipment they have on the shelf or by raiding idled rigs for parts, components, and drill pipe."

Also we can't forget that with many oil producers currently so financially challenged, maintenance often gets shifted to the back burner. That means equipment is likely to wear out faster and boost National Oilwell's orders down the line. 

Now the rate of recovery will vary by equipment type. For example, management estimates that a recovery in easily cannibalized drill pipe is still a year away, but it is seeing renewed interest in drilling motors, wireline units, and fiberglass pipes.

An oil crash is a great time to go shopping
Finally, I'd like to point out that, just as National Oilwell is currently cheap, so are many of its competitors. That means that this is a great time for the company to strengthen its portfolio of products and services by growing through acquisitions, as it has through over 300 buyouts over the past 13 years. 

Management remains committed to a disciplined approach of growing market share through acquisitions, thus far purchasing three companies in 2015 with letters of intent to buy several more. 

Takeaway: Buy quality industry leaders like National Oilwell when there's blood in the streets
Don't get me wrong. National Oilwell's sales and margins have been hurt badly by the oil crash, and no one can predict when crude prices will finally bottom out, much less recover.

However, I am confident that the company -- which has survived countless oil crashes over its 153-year existence -- has the massive scale and strong balance sheet to eventually come out of this industry downturn stronger than ever. Thus I'd recommend that long-term dividend value investors consider using Wall Street's current overreaction to pick up deeply undervalued shares to profit from the inevitable industry recovery, whenever it finally arrives.

Adam Galas holds no position in the stocks mentioned here but does lead The Grand Adventure dividend project, which recommends National Oilwell Varco. The Motley Fool recommends National Oilwell Varco. The Motley Fool owns shares of National Oilwell Varco. 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.