How Risky Is Helmerich & Payne, Inc.?
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Anyone looking at the oil and gas industry today is much more aware of the risks involved in this industry than a couple of years ago. Years of peak oil fears plus the euphoria around shale made investors overlook how quickly this commodity business can see a rapid change in prospects. Today, investors are much more apprehensive about investing in this industry, even if it is a solid company like rig owner and lessor Helmerich & Payne (NYSE: HP).
Is the skepticism around investing in Helmerich & Payne justified? Let's take a look at the risks associated with Helmerich & Payne and its stock and why, over time, those risks may be a little overblown.
The short-term risk
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Advertisement Forget Apple! Heres a Better Stock to Buy He Made 21,078% Buying Amazon. Heres His New Pick Data source: S&P Capital IQ TTM = trailing 12 months. This suggests that if the market were to remain at this level for some time, Helmerich & Payne is in fine shape to handle it, and could even gain some market share if others can't get their acts together. Then, there is the possibility that we see a decent recovery in the industry. If that were the case, then Helmerich & Payne is even better positioned. Today, more than 85% of all drilling in the U.S. involves horizontal drilling and requires high-specification rigs. Of the amount of available rigs that meet these standards, Helmerich & Payne has more available than Patterson UTI, Nabors, Precision Drilling, and Unit combined. Image source: Helmerich & Payne investor presentation. If you look at Helmerich & Payne over a pretty short time horizon, then it's very easy to get caught up in the risks of the tepid rig market across the U.S. and the fact that Helmerich posted a loss for the first time in ages. The further we back out and look at the longer-term future, Helmerich & Payne looks much less risky. It has both the best fleet of rigs and the best financial foundation in the business that will help it work through today's and tomorrow's market much better than its competition. If you are looking for a long-term investment in the oil and gas industry, Helmerich & Payne looks like a pretty low-risk bet. A secret billion-dollar stock opportunity Tyler CroweYou can follow him at Fool.comor on Twitter@TylerCroweFool. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 daysconsidering a diverse range of insightsdisclosure policyWhat a Fool Believes
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