10 Best Oilfield Services Stocks to Buy Now

7. Valaris Limited (NYSE:VAL)

Hedge Funds Holding Stakes: 39

Stock Upside Potential as of 12/08/2024: 45.22%

Valaris Limited (NYSE:VAL) is an oilfield company that provides offshore contract drilling services. It owns an offshore drilling rig fleet that includes drill ships and dynamically positioned semi-submersible rigs. It is a company that contains fire from all angles regarding operational efficiency. It operates a fleet of 52 rigs, including 36 offshore jackup rigs, 11 drillships, and 5 semi-submersible platform drilling rigs.

The company’s financial health is also noteworthy. Valaris Limited (NYSE:VAL) ‘s revenue efficiency in Q2 stood at 99%, with revenues increasing to $610 million from $525 million a year ago. Net income quadrupled to $26 million from $151 million a year ago. The company continues to record booming business, securing a $500 million contract backlog with Equinor offshore Brazil.

 While Valaris Limited (NYSE:VAL) is down by about 4%, it trades at a discount. Analysts on Wall Street rate the stock as a Buy with a $94 price target, implying a 45.22% upside potential from current levels.

39 out of 920 hedge funds tracked by Insider Monkey held stakes in Valaris Limited (NYSE:VAL) as of the end of Q2 2024.

In its Q2 2024 investor letter, Praetorian Capital shared insights on Valaris Limited (NYSE:VAL):

“Valaris Limited (NYSE:VAL) has been range bound for over two years now, awaiting the signing of new contracts at current market rates, that will replace expiring contracts that are frequently less than half of current prevailing rates. There have been some questions as to why the company has been slow to sign new contracts. However, I believe that management is trying to trade a slightly reduced price for increased duration of contract tenure, and that’s the reason for a lack of commentary on new contracts. Should the company announce new contracts at anywhere near current market rates, I believe that the shares will respond in a rather dramatic way—especially as Valaris is by far the cheapest of the large drilling companies (based on the enterprise value per rig metric), despite having one of the best fleets and strongest balance sheets. Between our common and warrant position, Valaris was our 2nd largest position at the end of June.”