Motley Fool: Oil-field giant keeps driving strong results

National Oilwell Varco’s (NYSE: NOV) third-quarter results were impressive. The oil-field-services giant posted year-over-year increases in earnings per share and revenue of 30 percent and 24 percent, respectively. All segments saw healthy growth, especially Rig Technology, which had a record level of capital-equipment orders.

In its quarterly conference call, management noted that shale and other unconventional drilling now accounts for more than half of all North American activity. Regarding shale, the CFO explained that “… its efficiency-obsessed, time-shortening, consumption-accelerating drumbeat will continue to drive (the company’s) performance” as it accelerates demand for products and services.

Thanks to an advantageous melding of two key ingredients – technology and oil price – deepwater drilling is also driving strong results, including the landing of 28 offshore rig packages.

National Oilwell Varco has built its dominant position through mergers and acquisitions. This strategy can be tough to execute and has led many to mediocrity, or worse. But National Oilwell Varco’s management has executed it well for a long time.

This company is likely to remain a dominant player and is a good way to gain exposure to the energy sector. (The Motley Fool owns shares of National Oilwell Varco, and its newsletter services have recommended buying shares of it.)

Ask the Fool

Q: What should I do if the stock market crashes? – A.W., Asheville, N.C.

A: Above all, don’t panic. Remember that the market always goes up and down, and sometimes it moves sharply. This is why you shouldn’t have money in stocks that you’ll need within, say, five (or better still, 10) years.

In the near term, anything can happen, including a crash. Over the long run, though, the market has recovered from all its crashes and has gone on to set new highs – eventually.

So brace yourself for inevitable occasional downturns. Know that while your $2,000 investment in a stock might grow to be worth $4,000 within a few years, it might also drop to $1,500 in short order.

Over the long haul, though, if the company is healthy and growing, the stock price should catch up to the company’s worth.

Market crashes have a big upside: They can offer terrific bargains. Remember Warren Buffett’s advice: Be fearful when others are greedy, and greedy when others are fearful.

My dumbest investment

I bought into AIG, American International Group, after it plunged in the credit crisis – for about $0.70 per share. It executed a reverse split, so the shares had a higher price, but I owned fewer of them. After a wild ride up and down, it fell to $8 (equal to $0.40, pre-split). I then heard on the radio that a short seller predicted it was heading to $0. I panicked and sold – but later, the shares were at $56. I am very sad. – S., online

The Fool responds: It’s never good to panic. You should have a good handle on why you own any given stock, as well as an idea of why you might sell it. Financial prognosticators often turn out to be wrong. Remember, too, that short sellers in particular (those who bet against stocks that they think will fall) can be extra-pessimistic, and can even profit by getting others to sell a stock, so that the price falls. After being bailed out due to being too big to fail, AIG is now on firmer ground and reporting profits.