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Nabors Industries Ltd. Message Board

  • vipmoneymachine vipmoneymachine Oct 26, 2006 10:25 PM Flag

    Jim Jubak's take


    Sell Nabors Industries

    I'm going to sell Nabors Industries (NBR, news, msgs) out of Jubak's Picks on the upward bump the stock got from the great third-quarter results the company reported on Oct. 24. Earnings for the quarter climbed 64% to $1.03 a share, 5 cents a share above Wall Street projections. But in a cyclical business such as this one, what's important to investors isn't the growth rate last quarter, but whether growth in the next quarter and year will be faster or slower. And that's the rub for Nabors Industries and the shares of other oil drillers: After the 64% earnings growth in the third quarter and the 68% growth projected for the fourth quarter, the 52% growth Wall Street expects for the March 2007 quarter looks like a slowdown. Earnings, now projected to grow by 78% in 2006, are projected to grow by 34% in 2007. That's nothing to sneeze at as a growth rate, and it will be a major achievement by management to hit that number even as oil and gas prices level off. But the decline raises fears among investors that we're headed toward a steeper fallback as we move toward a cyclical bottom as new rigs are delivered, adding to industry capacity in 2008. (It's a bad sign, Wall Street notes, that while the day rates that Nabors earns on its rigs are still climbing, they're climbing at a slower rate. The company said that in 2007, gains will come from increased drilling volumes rather than increased rates.) As of Oct. 27, I'm selling these shares out of Jubak's Picks with a 17% loss since I added the stock to this portfolio on Dec. 9, 2005. (Full disclosure: I will sell my personal position in Nabors Industries three days after this column is posted.)

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    • Can you or someone post the link please.

    • run when you see the name jubak. he wrote a piece on why to buy eBay@ 105.00.

    • He must be getting paid off like most analysts. If they lived off thier investments, they would have to write thier advice on used toilett paper, while sitting under a bridge somewhere. These guys can't even beat the s&p. I love the negativity on WS it means we are going higher and the bottom is in.

    • The Jubester is getting squirrely. If he had bought NBR when I did, back when he thought there was too much skepticism on Wall Street with respect to the drillers, he'd have had a double by now.

    • "Full disclosure: I will sell my personal position in Nabors Industries three days after this column is posted.)"

      Gee vipmoney, that's super nice of you to open the door first. Otherwise with only 7 million shares a day trading I might not be able to get thru the door based on your post.

      Oh yes, NBR's business is bound to slow down some day. You betcha!

    • Well, that sums up what wall street is thinking with regard to the drillers. It doesn't make any sense, maybe if NBR was at $60 you say sell at the top, its not going any higher, but when its at the bottom? they are worried about 2008, is the stock going to have a PE of 3 in 2008 ?

      • 1 Reply to netnimble
      • Great analysis cheap. I have watched Jim for years and he is consistenly wrong on the energy sector. His own recent article on Russia and oil conflict with dropping NBR. He just added grp? LOL...he just dropped a few months ago after LOSING about 30 percent and now he is adding it back. Um yeah he really has a blind spot on energy. If you look at his picks for 12 months they are really atrocious performance wise....he seems to do very shallow analysis and then jump in and out. Due to just one or two MASSIVE hits on a couple of stocks he can show a positive portfolio but overall he misses way more than he hits. I am very disappointed in him and quit following any of his advice long ago.

    • What a moron. The forward PE is 7 for crying out loud. It's priced for no growth or a retraction in earnings.

    • jim jubak just added GRP to his portfolio saying their earning will accelerate. NBR is the biggest customer for GRP products. go figure

      NBR has been saying for the past few quarters that most of their money will come from new rigs not from the day rate increase. day rate increase has been icing on the cake.
      Wall street increased Q3 by 20% and NBR still beat the numbers.

      It is amazing to me that people selling a stock relentlessly because 2 years from now there might be a slow down. lets by tech since all of them going to make money for ever. anyway, 60% of NBR's business will come from international markets which is very stable and they said almost 50% of their rigs have contracts some as far as 2010.

      OPEC stated that by 2025 world consumption of oil will double. consumption increases around 1.8% annually. considering 3 times increase in rig numbers and no increase flat production of oil in last decade, I think that will amount for a lot of rigs.

      last time we had a increasing number of rigs and a real glut was 1986. after Iran & Iraq war started, oil soared and market over reacted in matter of 4 years 4500 rigs came to market and with US economic slow down and the fact that both countries involved were pumping a lot of oil and selling it in black market dirt cheap. oil prices collapsed so as rig market. that is where this Bullsh#@ originating.

      today, there are 1700 rigs in the market. nobody is building one if they do not have a firm long term contract in hand. there are no trained workers whom can even run a few new rigs that are coming to the market.

      It is not 1986 and US is not consuming 60% of world oil. in a few years with world globalization even US economy will not be important. Drilling is ever more difficult and with high world consumption it is not cyclical anymore.

      read what he said last march when the sector was down.
      Investors who want to know when oil stocks will start to recover can take heart at recent developments in the global economy. It's starting to look like the world's economies will grow faster in 2006 than previously projected. The International Monetary Fund (IMF), for example, has indicated that it will raise its forecast for global growth this year to 4.8% from an already healthy 4.3%. As long as growth stays on track for the global economy, I think it's worth holding energy stocks through what looks like an extended version of the sector's traditional late-winter weakness. I'd only sell this sector if the global economy started to slow -- which would reduce demand and prices for oil and gas. Right now that doesn't look likely and, in fact, the numbers are starting to pile up on the side of stronger-than-expected growth. Stay tuned, though. We're dealing with projections here, and there's many a stumble possible before investors get to take projections to the bank.

      by the way, Jim predicted we go to recession after katrina.

      I have 3K shares and I am not selling.

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