The best times to add stocks to your watch list is when those stocks are dropping. Ergo, now is a pretty good time to be adding stocks to your watch list, and I have one for you.
Opportunity in disaster
We're all well aware of the disaster that is BP's
The same goes for Transocean
That said, this disaster has caused skepticism about the future of offshore drilling, and there are companies operating in the sector that have no responsibility for BP's problem that are starting to look attractive.
A better idea
Since the BP disaster, however, CGGVeritas shares are off more than 20% on fears that the world's appetite for offshore drilling will diminish or that governments may regulate the number or nature of offshore wells. Both of these knock-on effects from the crisis would reduce the amount of business expected to flow through to the company.
Keep in mind, though, that CGGVeritas does not rely on the U.S. for business. Rather, well more than 50% of the company's sales today are coming out of Asia, Latin America, Europe, and the Middle East. Thus, it would take a total global re-evaluation of offshore drilling to significantly ding the company's long-term results. This is unlikely given how many of the emerging economies in those parts of the world rely on the energy industry for continued growth and development.
Similarly, because CGGVeritas is among the largest and best-capitalized of all of the operators in this space, a temporary downturn in demand is more likely to hurt small competitors than it is the biggest players. In other words, a crisis like this could actually help it pick up market share.
Why not buy?
Although CGGVeritas isn't quite cheap enough at these prices to make it a no-brainer, it is starting to get into that territory as the stock declines. Again, this company has no direct exposure to the BP spill, and while popular and political reaction to the disaster could make it hard going for the offshore energy industry in the near term, long-term energy demands dictate that this industry is around to stay.
That's why we like CGGVeritas at Motley Fool Global Gains and why this stock is a promising candidate for your watch list. If you're looking for more emerging-markets ideas, click here to get a free Global Gains guest membership. There's no obligation to subscribe.
This article was originally published March 11, 2010. It has been updated.