Oil Will Be Back

Dril-Quip is like its name an equipment company for off shore drilling. It has weathered the oil downturn and is in less of a funk than its peers. I like this company long term. It is a good place to jump back into this industry.

The website www.dril-quip.comdescribes the company as:

"... one of the world’s leading manufacturers of offshore drilling and production equipment that is well suited for use in deepwater applications. 

The Company designs and manufactures subsea, surface and offshore rig equipment for use by oil and gas companies and drilling contractors in offshore areas throughout the world. Dril-Quip also provides technical advisory services, reconditioning services and running tools for use in connection with the installation and retrieval of its products. 

Headquartered in Houston, Texas, Dril-Quip has manufacturing facilities in the United States, Brazil, Scotland and Singapore. The Company also has sales and service offices in numerous locations throughout the world. Dril-Quip’s manufacturing operations are vertically integrated, with the Company performing essentially all of its forging, heat treating, machining, fabrication, inspection, assembly and testing at its own facilities. The Company has developed its broad line of subsea, surface and offshore rig equipment primarily through internal product development efforts. 

Dril-Quip is recognized for its full range of innovative drilling and production products that can be utilized to provide total solutions for offshore field developments."

This is a great investment opportunity. Here are the reasons:

1. It's rate of growth is the least reason for buying this company but an 8.6% growth in a low oil environment does not concern most. Most small capitalization companies Better Investing seeks a 12% growth rate. This is a small cap with $840 million in sales last year. It has no that is $0 in debt something remarkable for this industry. I made this a yes.

2. This company knocks it out of the park in pre-tax profit in comparison to its peers. That rate is 25.8% compared to 9% for the industry.

3. This company also is a winner in earnings on stockholders equity with a 13.29% exceeding by 1/4 th the industry that is at 8.4%. Impressive.

4. Earnings per share rate of growth is almost the same as sales which is ideal. The rate is 9.4%. A YES.

5. It is a true growth company that pays no dividend. A YES.

6. The upside-down side ratio is at a whopping 45. A BOLD YES.

7. Then to top it off the company is available in the low end of the buy scale at $65.20. The buy zone is between $59.80 - $92.70 so has great upside opportunity. Its 52 week high is $69.40 and that reflects the oil environment. The price was $121.10 the all time high with the low of $73.70 in the same year; 2013.

DRQ cost basis $6,547.00 value is $6,540 = - $7.00

DNKN cost basis $5,273.00 value is $5,543.00 = $270.00

CGI cost basis $769.00 value is $910.00 = +141.00 

SRCL cost basis $7,719 value is $7,783.00 = +$64.00 

LULU cost basis $6,855.00 value is $6,755.00 = -$100.00

GNTX cost $1,856.00 current $2,053.00 .... +197.00

BNS paid $5,408.00 value $6,192.00 = +$784.00

TSCO paid $6,667 value $7,354.00. = + $687.00

KMX paid $5,444 value $6,807.00 = + $1363.00

LCI paid $3,238 value $2,155 = - $1,083.00

JLL paid $9,699 value $11,329.00 = + $1,630.00

Looks like we now have a gain of $3,946 in our portfolio. That is almost a 7% return since September. Not bad. You can begin to see how this works. You just have to open a brokerage account and deposit funds. It can be an IRA traditional or roth. There are limits to what you can deposit in a retirement account so see your accountant or financial advisor to know your options.