PRECISION DRILLING CORP. $14 - Toronto symbol PD

PRECISION DRILLING CORP. $14 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 292.1 million; Market cap: $4.1 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.7%; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract drilling services to land-based oil and gas producers, mainly in North America. The company operates 330 rigs.

Higher oil and gas prices have spurred demand for Precision’s drilling services. As a result, its revenue rose 12.8% in the first quarter of 2014, to $672.2 million from $595.7 million a year earlier. Earnings gained 8.8%, to $101.6 million from $93.3 million. Per-share earnings rose 6.1%, to $0.35 from $0.33, on more shares outstanding.

In response to stronger-than-expected drilling activity, Precision now plans to spend $833 million to build and upgrade rigs in 2014, up 31.4% from its earlier forecast of $634 million. Drillers have already signed contracts for these new rigs, which cuts the risk of this investment.

The company will probably earn $0.90 a share this year, and the stock trades at 15.6 times that estimate. The $0.24 dividend yields 1.7%.

Precision Drilling is a buy.

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