Today’s Daily Alert recommendation comes from Dow Theory Forecasts Editor Richard J. Moroney.
“Helmerich & Payne, Inc. (HP, $55), an oil and natural-gas drilling contractor, has grown sales 24% and per-share profits 32% over the last year. In each of the last nine quarters, sales have risen at least 18% and profits at least 25%.
“H&P has managed stronger growth than most peers because of its technological advantage — newer, more flexible rigs capable of drilling in shale formations. The quality of H&P’s fleet has kept its utilization rate among the highest in the industry and limited exposure to industrywide declines in day rates. Rising profitability at the rig level has helped the company boost operating profit margins.
“H&P shares have risen 18% since topping September-quarter sales and profit estimates but still trade at 10 times estimated 2013 earnings, roughly in line with peers despite superior growth potential. Earlier this month, the company more than doubled its quarterly dividend to $0.15 per share, payable March 1. H&P, now yielding 1.1%, is being initiated as a Buy and a Long-Term Buy.”
- Richard J. Moroney, Dow Theory Forecasts, December 10, 2012