Shares of Cameron International Corporation (CAM) hit a 52-week high of $69.33 on Jul 9, 2014. In fact, the oil drilling equipment maker’s stock price climbed over 17% since the beginning of the year. This price appreciation can be attributed to consistency in its earnings and attractive fundamentals.
Why the Bullishness?
Cameron International is a leading manufacturer of pressure control equipment used in onshore, offshore and subsea applications for oil and gas drilling, production and transmission.
The company has a strong backlog that provides ample visibility for its earnings growth and cash flow prospects. Moreover, with oil and natural gas demand remaining strong, several exploration and production firms are looking toward increasing capital spending to garner profits. This could bring additional contracts for Cameron International.
Last month, Cameron International divested its Reciprocating Compression business to General Electric (GE) to improve services and sales in its core growth areas. Focusing on strategic growth regions could prove beneficial for the company.
Additionally, improving international operations and a favorable outlook for subsea activity levels are the other growth drivers. Cameron International boasts two back-to-back quarters of earnings beat and another one may well be on the cards as suggested by the recent rise in estimates. The company looks good on the valuation front as well with a forward P/E of 17.60, lower than its peer group average of 19.05.
Zacks Rank & Stock Picks
Cameron International currently has a Zacks Rank #2 (Buy), an indication of more good news for the company. Other stocks worth considering in the oilfield machinery and equipment sector include Matrix Service Co. (MTRX) and Forum Energy Technologies, Inc. (FET). While Matrix sports a Zacks Rank #1 (Strong Buy), Forum Energy has the same Zacks Rank as Cameron International.
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