Top Five Large-Cap Stocks: Hess, Noble

While oil prices are currently trading at record levels, these prices are also highly volatile and cyclical in nature. Because Hess generates a significant portion of its income from the production of oil and gas, any significant unexpected downturn in oil prices could negatively impact earnings. Such a downturn could occur if high oil prices generate higher demand for low-cost alternatives or if the slowdown in the U.S. economy and weakness in the U.S. labor market put further pressure on the demand for oil and gas products.

Noble Corp. (NE Quote - Cramer on NE - Stock Picks) is an offshore drilling contractor for the oil and gas industry. It provides contract drilling services using a fleet of 62 mobile offshore drilling units. These units are deployed in key markets worldwide, including the Middle East, Mexico, the North Sea, the Gulf of Mexico, Brazil, West Africa and India. The company also provides labor contract drilling services, well site and project management services, engineering services, and value-added drilling related products and services. Noble strives to expand international and offshore deepwater capabilities through acquisitions, rig upgrades and modifications, as well as redeploying assets in important geographical areas.

Our buy rating for Noble has not changed since June 2004. Revenue surged 33% year over year to $861.4 million in the first quarter of fiscal 2008. Record-high energy prices and a strong demand for the company's offshore drilling fleet drove earnings up 54% year over year to $384.2 million, or $1.43 a share. During the quarter, the company secured commitments on eight deepwater rigs for multiyear terms commencing as late as fiscal 2010, and had about 83% of its total rig operating days committed for fiscal 2008 as of March 31. Additionally, about 50% of its total rig operating days were already committed for fiscal 2009.

« Previous Page

1 2 3 4 5

Next Page »