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Media headlines are saying President Trump inked several hundred billion dollars of deals and investments with Saudi Arabia. Investors reading the reports are naturally asking which companies will benefit and, more importantly, what the investment potential is.
In this column, I will address six energy companies to watch, as others have covered defense/aerospace companies.
I follow the ZYX Change Method of investing and trading. The method consists of six screens. The premise behind the ZYX Change Method of investing is that the most money is made with the lowest risk by successfully predicting the change before the crowd. American companies have always done well in Saudi Arabia. Now they are likely to do much better than they did during Obama’s years. This is a change and may lead to profitable opportunities for investors.
Weatherford WFT, +0.76% executed a memorandum of understanding for $2 billion for localizing oil-field services and goods to Saudi Arabia. Localization is very important to the Saudi Arabian government. It would not be a surprise to see this deal expand.
This stock is in The Arora Report portfolio. We provide specific buy zones, stop zones and target zones to our subscribers.
Exxon Mobil XOM, +0.44% signed a deal to do a study on a potential petrochemical project to produce ethylene. This may turn out to be a very large project. In our view, given the immense size of Exxon, this is not material and not a reason to buy Exxon Mobil.
General Electric GE, +0.46% signed $15 billion of deals. The big component of the deals is GE helping Saudi Arabia make power generation more efficient.
This is a big order, but GE currently does not pass five of the six screens of the ZYX Change Method.
Nabors Industries NBR, -1.90% is likely to see $9 billion of investment over 10 years and the creation of up to 5,000 Saudi jobs.
Nabors currently passes five of the six screens of the ZYX Change Method. The Arora Report is likely to issue a buy signal; a signal has not been issued yet. If oil moves up, the stock has the potential to double over the next three years.
Rowan RDC, +1.53% will work on offshore drilling rigs as a component of a $7 billion investment over 10 years. The stock currently passes only two of our six screens. Some 24.1% of the shares are sold short, meaning many investors are betting on a decline in the stock. This is a setup for a short squeeze, in which the short sellers are forced to buy the shares. If a short squeeze appears to start, we may take a position for a short-term trade but not a long-term investment.
National Oilwell Varco
National Oilwell Varco NOV, +0.40% will get $6 billion over 10 years of investment in a joint venture to make drilling rigs. National Oilwell currently passes only three of our six screens. However, National Oilwell is a potential buyout target. For this reason, the stock is on our radar to buy at the appropriate time.
Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article or may take positions at any time. All recommended positions are reviewed daily at The Arora Report.
Nigam Arora is an investor, engineer and nuclear physicist by background, has founded two Inc. 500 fastest-growing companies, is the developer of the adaptive ZYX Global Multi Asset Allocation Model and the ZYX Change Method to profit from change in trading and investing. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com.