It is a tough environment to be looking for individual stocks, but that doesn’t mean all stock picking should be thrown out the window. I was doing some research over the weekend and stumbled upon an interesting small cap drilling stock that looks cheap. I’m a big fan of keeping a shopping list of prospective stocks and this one should be on there. The stock in question is Parker Drilling (PKD).
The company provides contract drilling and drilling-related services in the United States, Latin America, Africa and the Middle East (AME), the Asia Pacific, and Commonwealth of Independent States (CIS). It is a small cap stock with a market cap of only $600 million.
Strong Quarter
Parker reported a great second quarter in early August in which earnings per share came in at 14 centsper share, six cents ahead of the consensus. Revenues grew about 10% from last year to just over $172 million. Management attributed the strength to a great performance in its Rental Tools division.
“Our second quarter performance was led by the continued strong growth of our Rental Tools segment, accompanied by benefits from a substantial improvement in our U.S. barge drilling business and an expanded portfolio of projects in the Project Management and Engineering Services segment. This was the result of better market conditions leveraged by the growth- and profitability-focused strategies of our operations,” statedParker Drilling Presidentand Chief Executive OfficerDavid Mannon.
The stock is currently trading at just 7.3x forward estimates and only 1.05x book value. Over the past month, 2012 estimates have jumped 12 cents to 71 cents per share, mostly as result of the strong second quarter results. PKD does have some debt on the balance sheet, but not an onerous amount with a debt/equity ratio of about 0.8. I think it’s a great time to at least be watching the stock if not buying it here.It is worth more than the current price, but investors are understandably skittish these days, especially about smaller stocks.
A Small Cap Driller To Watch is an article from: 
