Schlumberger (NYSE: SLB) has been one of Stocks on Wall Street’s most talked about stocks and one of our most popular articles when we first recommended the oil and gas exploration company. So far we’ve written a couple different articles about Schlumberger that have been a success all-together, receiving strong recognition and attracting millions of hits being published on several different platforms. Of course the article was first published on Stocks on Wall Street’s main page, it was also part of MarketWatch’s monthly stocks to buy list, was featured on the front page of Seeking Alpha twice with both the premium articles ‘s that site receiving hundreds of thousands of views. In addition, our thoughts and recommendations on SLB have been seen all over the world being shared across many different social media platforms as well. As a result, it was a closely watched investment as many of our loyal readers now own SLB including ourselves and as a result we were interviewed by MarketWatch’s equities writing department as they were interested in interviewing Stocks on Wall Street about Schlumberger (NYSE: SLB) with many different questions on how has it performed, has it lived up to the hype, what should we expect now, how to trade it, what to do if you want to invest, and then many more different predictions and detailed analysis. We were lucky enough to get back our original transcript so here it is, the conversation between our CEO, James Hartje and MarketWatch’s Investments Writer:
Would You Say Schlumberger Has Been Stocks on Wall Street’s Top Investment of the Past Year? While Schlumberger (NYSE: SLB) has been one of Stocks on Wall Street’s more interesting investments this past year, it hasn’t been our top investment. Allegiant Airlines (NASDAQ: ALGT) is still our #1 investment so far up ⇧87% in 10-months, our big winner. Just read this article to find out more about ALGT. As for SLB however like we said it’s been interesting to watch as in terms of market movement, SLB has been all over the map. Nevertheless it has been a solid investment since we issued our ‘BUY’ recommendation and bought a significant significant position in SLB purchasing shares at $57.72 on October 3rd, 2011. SLB has been a roller coaster ride for investors over the course of the past 9-months. Its seen many up and many downs as SLB has set new 52-week Highs and Lows several times since we purchased it.
Have You Sold Any Shares Yet? Nope, despite the huge volatitly of the stock peaking at both its highs and lows we have remained patient and confident in the stocks prospects and haven’t let any of the volatile times rattle us and cause us to make iraddic moves. The only trade we’ve made besides our original purchase at $57.72 was our Repurchase Plan where we decided to up our investment 25% and purchase our added shares at $59.67 on 6/26/11.
Why Did You Decide to Buy More Shares? We are strong supporters of SLB and believe it is a great investment and one with lots of potential going forward. There are many reasons we think SLB is a great investment and many reasons for it to trade higher which were all major components in our decision to up our original investment and purchase another 25% more shares from our previous total.
How has SLB Performed for You? SLB has performed quite well over the course of the past 9-months. Currently our shares are up ⇧22% from our original purchase and up 20% on our 25% repurchase plan. However it hasn’t been stable at all during these times with huge ups and downs as the stock is highly volatile in pricing and has been all of the map in 2012.
You Say Its Been a Roller Coaster Ride, what Kind of Ups and Downs Have You Endured During Your Investment of SLB? Well already in a 9-month spam we have set new 52-Week Highs and 52-Week Lows several times with share prices spiking at the start of the year then declining steadily in 2012 before recently popping higher. It’s been volatile times since the start, back in February SLB was trading at it’s High for the year at $80 per share. Unfortunately $80 was as high as it got as shares hit strong resistance levels sending shares into a deep decline. At that time SLB had appreciated ⇧34%, we were thinking, “great trade so far, up ⇧34% in less than 4 months that’s amazing!” Unfortuanately we set the bar high with heavy expectations that SLB was going to be a ten-bagger, instead SLB hit a rough patch trading lower over the course of the next 4-month hitting new 2012 lows of $59.67 on June 26th making shares now only up 3% from our original investment.
What made you choose to repurchase shares of SLB on June 26th? It had been hard times for SLB in the couple months leading up to June as SLB was really slumping, falling from it’s highs in Feburary at $80 all the way down to $59.67 on June 26th slashing all of our earnings as our total yield fell from ⇧34% to ⇧4%. It has been rough times for investors and we just hoped our readers listened to what we had to say and didn’t lose their patience and sell-off shares scared by the fact there investment could go into the negatives. We didn’t take that approach, even though the shares depreciating was disappointing we didn’t let it change our investment strategy as we still thought SLB was a great investment as even though the stock was struggling, SLB the company made many steps forward as a company and we still believe they were a great company with lots of potential and great prospects going forward. As a result, we decided to stay course with our investment and in fact when we saw that shares had fallen that far we decided to purchase more in our Repurchase Plan adding 25% the amount of shares to our original amount. We believed that it was a great buying opportunity and felt that it would be one that could payoff greatly in the future. This goes for our strong confidence in SLB so we decided to write another article Featured on Stocks on Wall Street’s main page explaining out thoughts of SLB long-term and why we still thought it was a great investment despite the recent slide.
What Have Shares Done in the Past Month Since Hitting the 2012 Lows and Since Your Repurchse Plan? SLB has done a commendable job making a comeback and recovering strong, rebounding effectively. In less than a month, shares of SLB have jumped from $59.67 to $69.33, a total yield of ⇧18%. This has been great for both our original investment and Repurchase Plan as both are financial successes up ⇧18% and ⇧22% respectively. Quite a strong month for SLB and just what we needed after the tough times before.
How do you expect SLB to perform in the 2nd Half of 2012? Any big surprises? We expect many great things from Schlumberger (NYSE: SLB) in the 2nd Half of 2012. SLB isn’t seeing signs of a slowdown in international activity, despite increasing concerns over a shaky global economy. CEO Paal Kibsgaard says following its solid Q2 results. “Absent a future setback to the world economy, we’re expecting 10% international growth” in operations this year, he said during a conference call. This help reassure our own thoughts already which had SLB going higher in 2012 based on strong international growth, lots of backloaded contracts that are starting to pay out, strong past earnings means even stronger ones to come.
What is one of the Main Reasons You Think SLB Is a Strong Investment? While SLB has many different segments factoring into it being a great investment, many of which we’ve either stated already or we’re about to. One of the biggest strengths SLB has for me is the strong analyst coverage backing it shows that I’m not the only one who is crazy enough to think it’s a great investment.
“Strong Analyst Coverage is a Major Reason Why We Like SLB So Much” – Stocks on Wall Street CEO, James Hartje
Yahoo Finance Gives SLB a ‘Strong Buy’ Recommendation Pegging the Stock at 1.8 on their 1.0-5.0 Scale with 1.0 being a Strong Buy and 5.0 being a Strong Sell.
Stocks on Wall Street & Yahoo Finance aren’t the only one’s who think SLB is a great investment. Currently 32 Analysts from various banks, hedge funds, mutual funds, etc; are rating this stock and last month nine analysts recommended investors that SLB was a ‘STRONG BUY’, twenty recommended investors that SLB was a ‘BUY’, and only three recommended investors to Hold. Strong analyst coverage like that is a great sign for improving investor confidence knowing that many of the top analysts like this stock a lot to. Having strong analyst coverage is a key determinant we look at when we’re surveying various investments. That was a major selling factor for us on SLB as when 29 of 32 analysts are recommending the stock as either a ‘BUY’ or ‘STRONG BUY’ it assures us and gives us that a lot of smart people think this is a good investment. Also it helps give confidence to investors which will then in return lead to more investors purchasing shares of SLB so then in return share prices would rise, win, win! In addition to having strong analyst coverage, Schlumberger is currently a major holding for both Billionaire Investor Ken Fisher and Billionaire Natural Gas Tycoon, T. Boone Pickens.
Price Target is something you should all watch closely on any investment your looking at. It’s created by the analysis of 25 Brokers who all vote and weigh in on there different opinions and create precise price targets for the stock going forward. 25 Brokers came up with the consensus on their price targets for SLB as they ranged from as High as $98 to as Low as $71 with a Mean Target of $86.24 and a Median Target of $87.00. These were reassuring numbers to why I thought SLB was a great investment as in all situations it had my investment panning out as profitable.
If everything went wrong for SLB and they hit the low price target trading at $71 our total net yield would still be ⇧23%-⇧25% topped off with a ⇧1.6% Dividend we would have a total net yield of ⇧26.6%, a very good return. While yes it is a very good return, it would be a dissapoitnment to us as we had big plans for SLB. Luckily that was only if shares followed in line with the analysts Low Target.
If we go to the next level, analysts had shares of SLB pegged at $87 per share, there Median Price Target. At that point, the total net-yield would be ⇧51% plus add on the ⇧1.6% dividend we would have a total gain of ⇧52.6%, an amazing investment for our portfolio and a big winner among all our fans and readers who actively trade themselves.
The fact is though with all the great prospects in line for SLB and the optimistism going forward it’s very well likely that SLB could at some point meet the High Price Target of $98 per share. If this really happened, and SLB skyrockets in the 2nd Half then SLB will become one of Stocks on Wall Street’s Top Investments of All-Time. Originally purchasing shares at $57.62, if they rose all the way to $98 it would be a dream come true, a great portfolio builder for both us and all our readers, and a great pick for Stocks on Wall Street’s record. Total yield for our SLB Investment if it hits the analysts high-target of $98 would be ⇧71% top on the ⇧1.6% Dividend and we have a total net-yield of ⇧72.6 making it one of our top investments of the year and a big-time winner among our loyal readers.
What Do You Have to Say to Traders Looking to Make a Move on this Trade? We do think SLB is a good trade name that’s bottoming right now. SLB has been forming an inverse head-and-shoulders pattern for the past few months, a setup that indicates exhaustion among sellers. Even though the inverse head-and-shoulders pattern in this stock isn’t as symmetrical as a textbook example would be, the buy signal still comes on a breakout above the $68 neckline. For SLB, that breakout came yesterday.
Lest you think that the head and shoulders is too well-known to be worth trading, the research suggests otherwise: A recent academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in “profits [that] would have been both statistically and economically significant.” That bodes well for the breakout in SLB. Earnings were better than expected another strong point as SLB Q2 EPS of $1.05 beats by $0.05. Revenue of $10.45B (+16% Y/Y) beats by $40M. I recommend for purchasing shares all the way up to $70 right now as currently shares are trading at $69.33, still a good price point to get in on. (Look at Graph Below for Further Explanation)
What Do You Have to Say to Investors Looking to Hold this Stock for the Long-Run? If you currently own SLB great job, while its been a bumpy road the 2nd Half of 2012 is going to be a great time for SLB investors as shares will continue to excel trading higher and making money for your porfitlio, just look at our potential situations above in the price target section to see what kind of returns are possible. If you don’t currently own SLB, we’d recommend you get in quick if you want to invest as SLB will start to rise to the point it will be too expensive to buy. SLB is currently trading at $69.33, a good entry point for long-term investors. I’d recommend you buy all the way up to $72 so your time isn’t long so make sure to make the move soon.
Ultimately How Do You Guys Expect SLB to Perform in the 2nd Half of 2012? We expect SLB to do just fine in the 2nd Half of 2012 and continue their pace which they showcased in July with shares rising 18% in less than a month. We have provided all the many reasons to be invested in SLB above and given the many different what-if scenarios all ending up with SLB providing us with very nice overall gains becoming a strong investment for many people’s portfolios.
So what will SLB be trading at by the end of the year and what will your total net-yield for the investment be? We forecast that SLB will be trading at around $95 per share, a total yield of ⇧65% add on the ⇧1.6% dividend yield and our total net-yield for the year will be ⇧66.6% a great investment overall and a big winner for everyone’s portfolio’s.
Hope you all enjoyed our interview and got some invaluable investment advice and analysis about SLB. Remember if you ever have any more questions, comments or concerns please don’t feel shy to contact us at any time, no question is stupid.