Like the offshore drillers five years ago, the integrated steel companies are very good values, and I think and believe are gong to provide shareholders a very good return on investment.
Look at X (US Steel), NS (National Steel), WS (Wierton Steel - it is at 3 3/16 today), BS (Bethlehem Steel), AKS (AK Steel), OS (Oregon Steel), IAD (Inland Steel), STLD (Steel Dynamics), BIR (Birmingham Steel). I think anyone or all of these can give you a nice return, and are a lot less speculative than NE (ex-NDCO).
Again, NE is OK, it is just that it is a mightly risky cyclical, that has seen a 10 fold increase in value in the past 4 years. Cyclicals are just that, so does a NE (NDCO) bull think that it is going to happen again and that it is undervalued?
I think that the primary play with NE (NDCO) are the value of the rigs, not the "earnings". Hey, when operators pull the plug on exploration, watch out shareholders. You are going to be big losers. And Jim Day can't really do anything about it.
I think a better investment lomg term, in the oil service industry are in the integrated service and supply companies like SLB, SII, BHI, and WAI. This is value add.
NE is mostly just offshore iron, with some roughneck drilling crews. They don't explore for oil, they put holes in the ground for the oil and gas operators. In NE's case, to cut a hole in the ground, they mobilize offshore rigs, and try to keep their rig crews motivated, and safe. That's about it.
So when exploration demand drops in the Gulf of Mexico, shareholders of NE, beware!!!!!! And the history of the Gulf of Mexico is one of mean cycles.