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Varco International, Inc. (VRC) Message Board

  • rok_n_rol rok_n_rol Aug 17, 1998 10:36 AM Flag

    Still growing

    My neighbor works at MDTotco, a division of
    VARCO, and I bought some of the stock because they seem
    to have good indicators (beside PE, etc) - can't
    hire enough people fast enough, growing, expanding the
    plant, my neighbor is working mondo overtime because of
    backlog, etc. I think they'll outweather the storm and go
    back up just as fast as they came down.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Not at this price you won't.

    • If I was hearing correctly this morning, VRC got
      a real good mention by the guest host on CNBC.
      Strong BUY!!

      I will be doing some DD on this
      stock. Hope I don't miss out on a buy
      opportunity.

      SC2

    • VRC may take a while to recover, but it will be a
      big winner again. We will have to overcome the
      traders who buy and sell large lots to eke out a fraction
      of a point every time the price of oil moves up or
      down ten cents (I suppose you can make a good living
      at this if you can call the moves).

      Think
      long term. Buy it and forget about it for a while; and
      don't be tempted to bail out too soon either. It will
      be a shame if VRC gets bought out (and I'm sure
      there are lookers at these incredible prices) before it
      recovers.

    • BTW, similar issue arose w/respect to FGII and
      one of its customers (although impact was less
      clear). FGII also up big time (now over 15 from 10 and
      change).

      Also agree that any turnaround in oil sector will be
      much more apparent on flat or down market days. Still
      one gets the sense that something may be happening.

    • I agree that the effects of this one cancellation
      should be minimal, but it does point to a potential
      problem. If others start to cancel, which as the 10-Q
      points out - they can do, it could be a problem. The
      backlog is definetly worth watching.

      My investment
      club owns VRC and this was part of our discussion this
      past Thursday. So what did we decide to do? We bought
      more. We were happy to buy more at under $10. In fact,
      half of the group walked in the door with the same
      idea.

      As for VRC soaring today, well, everything is, not
      just VRC or oil sector.

    • I incorrectly assumed you were referring to a
      more recent press release or company release. 10Q
      plays down effect of transaction and states that
      deposit received should be sufficient to cover any of VRC
      expenses. Additionally 10Q refers to backlog of
      approximately $600 mill (large, by any standards, even taking
      into account cancellation).

      As we speak, VRC up
      almost 1 point (over 10). Other oil sector stocks also
      soaring today. Whether this coupled with gains from last
      week is indicative of rebound in oil sector remains to
      be seen. IMHO, will be more apparent when market is
      flat or down, b/c then increase will be more easily
      separated from general market.

    • I'm surprised to see how many information hungry people here haven't read the 10-Q.

    • I'm long on this stock. That has been documented
      on previous postings. This comment comes from
      Varco's 10-Q...

      On August 6 a customer announced
      that it was terminating the construction of a deep
      water drillship and had reached agreement with the oil
      company for cancellation of its five-year drilling
      contract. As a result, the customer cancelled orders
      totaling approximately $38.3 million, which were included
      in Varco's June 30 backlog. A significant portion of
      the equipment was due to be shipped in the third and
      fourth quarters of this year. Although the costs to
      Varco of this cancellation have not yet been
      ascertained, we believe that deposits received from the
      customer will be sufficient to cover, or substantially
      mitigate, those costs.

      It does not say what
      customer.

    • also indicated that while VRC had not ascertained
      the costs, VRC believed that the deposits received
      from this former client will be sufficient to cover or
      substantially mitigate those costs. Also backlog was almost
      $600 million. I agree with you that increase in price
      of oil plus market sentiment will help backlog in
      the future.

      I believe in VRC in the long term
      too. I just think that while VRC may dip lower, if
      there is a REAL shift in sector sentiment (and there
      have been signs that this might be coming), it will
      likely double within the next 3-6 months instead of 12.
      Even VRC at 18 or 19 is a far cry from its price of 33
      back in April of this year, and the fundamentals in
      either price of oil (oil was low back then too) or
      backlog has not changed. I think the current price is an
      overreaction to the sector sentiment, and a turnaround in such
      sentiment could move VRC in the other direction at just as
      fast a clip. This does not mean I'd recommend VRC for
      the quick buck--just that I think this sector moves a
      lot more quickly in each direction.

    • The company released it with the latest quarterly
      report to the stock holders. Most of you are short-term
      traders try to get a good buy...chasing the fast buck. Be
      investors...trading takes you nowhere...better return in Las Vegas.


      The loss in backlog should be the main concern but
      most likely due to the big oils reducing their
      expenditures. As the price of oil rises thru the winter we
      should see a backlog pickup sometime in 1999...so the
      drillers are unlikely to takeoff in the short-term. I see
      a lower VRC than this price but a double by
      mid-1999.

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