My purchase of Rowan Companies (RDC) is a direct result of what I've learned from reading "The Intelligent Investor."Originally I was following Schlumberger (SLB) because that's one of the most popular names in oil equipment. It had a relatively good P/E of under 20 and the call transcript didn't mention any major problems with future earnings. But when I compare the P/B values SLB has a book value of $30.72 per share while costing about $100. RDC has a book value of $39.86 while the stock trades at around $30.
Why the difference? For one there is fear in the offshore drillers right now because of a push for reduced day rates on rigs so all companies are trading lower. Second, Rowan is a major player in shallow water drilling and just sold off their land based business to focus on deepwater rigs which is where the big money is. Their first rig is built (so they've proven they can actually build deepwater rigs) and being deployed so this would be play on their future growth and with the stock being priced at below book value it has the largest amount to gain.
