Why Precision Drilling Shares Plunged

Is this meaningful? Or just another movement?

| More on:
The Motley Fool

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of Precision Drilling (TSX: PD) sank 10% today on news that its largest shareholder exited its entire position in the oilfield services company.

So what: Precision said in a statement that Alberta Investment Management Co (AIMCo) sold its entire 15% stake in an overnight transaction, triggering concern on Bay Street over the stock’s upside going forward. While AIMCo CEO Leo de Bever remains positive on Precision’s fundamentals, he believes that the stock is fairly valued at the moment.

Now what: I’d look into today’s double-digit plunge as a possible buy-in opportunity. “AIMCo acted independently of Precision in both its decision to exit its position and the facilitation of the overnight marketed transaction,” Precision noted in a statement. So while Fools likely won’t be able to replicate AIMCo’s more than 200% return on Precision, the stock’s current levels — down about 20% from its 52-week highs and trading at a forward P/E discount to the industry — seem like a reasonable risk-adjusted entry point.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Brian Pacampara does not own a position in any of the companies mentionedThe Motley Fool does not own a position in any of the companies mentioned.

More on Investing

10 stocks for the next 10 years
Top TSX Stocks

The Top 10 Stocks to Own for the Next 10 Years [PREMIUM PICKS]

These are the kinds of businesses that dominate their markets and end up rewarding investors time and again.

Read more »

A cannabis plant grows.
Cannabis Stocks

What’s Happening With Cannabis Stocks in October 2023?

Cannabis stocks are a shadow of their former selves, but with more movements in Canada and the U.S., could the…

Read more »

Canadian Dollars
Dividend Stocks

The Best TSX Stocks to Invest $5,000 in October 2023

The bearish market momentum of October 2023 has created a ripe time to buy three TSX stocks that can outperform…

Read more »

Increasing yield
Dividend Stocks

2 TSX Dividend Stocks With Lucrative Yields in October 2023

These stocks pay great dividends that should continue to grow.

Read more »

Gold medal
Dividend Stocks

Canadian Blue-Chip Stocks: The Best of the Best for October 2023

These TSX giants deserve to be on your radar.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Earn $50 a Week With These 3 Stocks

The right dividend stocks offer more than just a high yield. They offer sustainability and growth, so you can rely…

Read more »

rain rolls off a protective umbrella in a rainstorm
Investing

2 Defensive Stocks That Can Gain up to 128%, According to Bay Street

Cheap TSX stocks such as Dentalcorp are trading at an enticing valuation and have massive upside potential right now.

Read more »

oil and gas pipeline
Dividend Stocks

Where Will Enbridge Stock Be in 10 Years?

I wouldn’t be surprised if ENB stock even doubles in value in the next 10 years. Here why.

Read more »