National-Oilwell Varco, Inc. (NOV), Core Laboratories N.V. (CLB) & One Oil Stock To Buy This May

Core Laboratories N.V. (NYSE:CLB) sees North America stable while international markets will grow at around 7%. The fact that companies are willing to spend on its services indicates that the industry’s future equipment needs might pick up, for the reservoirs that Core Laboratories N.V. (NYSE:CLB) analyzes can require a lot of capital to develop.

This all speaks of good things to come for National-Oilwell Varco, Inc. (NYSE:NOV). It means oil and gas companies are spending money to grow and that growth will require additional equipment purchases. That’s where National-Oilwell Varco, Inc. (NYSE:NOV) can step forward in a way that “no other vendor” can; it really is the industry’s one-stop shop for all its drilling needs.

Why buy now?
While the market has been heading higher this year, shares of National-Oilwell Varco, Inc. (NYSE:NOV) haven’t been keeping up that same pace. That has put this premium business on sale as its shares trade at a very reasonable 11.7 times earnings. Over the next five years analysts are projecting earnings growth of just over 12% meaning you can get this solid business for a very fair price. When you put it all together, you can buy this premium business for an excellent price and enjoy years of growth as the business continues to perform.

Further, like I mentioned, the business appears to be poised to accelerate over over the next couple of quarters. As it does it could mean that analysts’ estimates were low, meaning that buying today could prove to be acquiring at an exceptional price. At some point this premium business will be repriced by investors to reflect its true capabilities to capture the major growth opportunities in the oil and gas industry.

Foolish bottom line
The biggest risk here is that oil prices decline and dry up the capital budgets at oil companies. I could be wrong, but right now I don’t see a big catalyst that would drive oil prices too much lower. Demand from China should continue to be robust and we’re still a long way away from a green economy here in the States. That’s why I think investors will do very well investing in National Oilwell Varco over the long term.

The article 1 Oil Stock to Buy This May originally appeared on Fool.com is written by Matt DiLallo.

Motley Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Halliburton and National Oilwell Varco. The Motley Fool owns shares of National Oilwell Varco.

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