"First recommended in September 2004, Helix Energy Solutions (NYSE: HLX) is the oldest holding on our Buy List - and the biggest winner, gaining 133%," notes Richard Moroney.
Here, the editor of Upside explain, "Considering its bright profit-growth prospects, reasonable valuation, and impressive Quadrix scores, Helix remains among our very best ideas and a top pick in the oil patch."
"Helix serves energy producers worldwide, providing such contract services (36% of total revenue for the nine months ended September) as deepwater pipe-laying, well operations, robotics, and reservoir services.
"The shelf-contracting business (34%) consists of 59%-owned Cal Dive International (NYSE: DVR), a provider of dive-related and shallow-water construction services.
"The fast-growing oil and natural gas production business (30%) focuses on marginal, mature, and smaller fields - properties no longer significant or viable for large energy companies. Fueled partly by high energy prices, petroleum companies are increasingly targeting mature and small reservoirs.
"Helix is an acquisitive company. The July 2006 purchase of Remington Oil & Gas added proved reserves and a large portfolio of prospects, mostly deepwater in the Gulf of Mexico. Management expects the deal to generate more than $1 billion of field services for its vessels.
"The October 2006 acquisition of Seatrac established an important offshore presence in West Australia. Last month, Cal Dive International acquired Horizon Offshore for $550 million. Horizon's fleet of nine vessels provides construction services in the Gulf of Mexico, Latin America, Southeast Asia, and West Africa.
"Large contributions from several large fields should begin in the second half of 2008, boosting full-year production volumes and earnings. For 2008, per-share-profit estimates range from $3.65 to $5.10, with the average of $4.54 implying 47% growth.
"For investors bullish on the energy sector, Helix offers a top pick based on its growing international footprint, robust demand for deepwater marine contracting, and increased contributions from new vessels. In addition, production gains and favorable pricing could bolster results. Over the next five years, per-share profits are expected to increase 25% annually.
"Helix seems undervalued at just nine times the 2008 consensus estimate. The average energy-equipment and services stock trades at 14 times expected profits, versus 18 for the average oil and gas producer. The stock, capable of reaching $50 over the next 12 months, is a Best Buy."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
