Sleuthifying Cabot’s August “Stock of the Month”

Unveiling the pick they tease as the "the best stock in the market across all sectors"

By Travis Johnson, Stock Gumshoe, August 16, 2012

Cabot’s Stock of the Month service is not unlike the entry-level “sampler” newsletters offered by a lot of publishers — in this service they pick their favorite stock from among all of the stocks recommended by their stable of newsletters for that particular month … and in Cabot’s case, they tend to promise that the stock will double, and every single month they compare the potential to one of their better past picks (we’re told), the 300%+ gain they made on First Solar (FSLR).

So what’s their “Stock of the Month” for August? Well, we do get a few clues, and some extra enticement …

“As I write this, China is slowing, the Eurozone is imploding, and political gridlock is about to trigger another volatile week on Wall Street.
Yet behind the scenes, our August Stock of the Month continues to power forward and richly reward investors with incredible profits.

“How can this be?

“Because it’s riding the wave of unprecedented growth that even the world’s financial troubles can’t knock down—generating $4 billion in new sales over the past 12 months while delivering gains of 363% over the past three years.”

And it turns out, the “unprecedented growth” they’re talking about is in deepwater drilling, the search for oil and gas a few miles underneath the ocean’s surface. Some more clues?

“Just Look at our August Stock of the Month and You’ll See Why I Can Make You this Money Doubling Guarantee

“Like First Solar, this company is not only riding the wave of profit growth—but its in the highly profitable deep water oil drilling sector where the future of oil production lies and where the company’s fast growth already made investors 363% richer since 2009.

“Once you see my full write-up on this, you’ll see why I’m convinced beyond a doubt this company will hand investors another 50% profits in the next six months and another double soon after that.

“And it’s all because the future of oil production lies at the bottom of the sea, where over half of all new oil and gas discoveries have been made since 2008.

“By 2020, experts believe that deep water drilling is expected to double from 5 million barrels a day to 10 million—10% of the world’s oil supply—all as shallow water drilling is expected to decline.”

Nice, sure, but not all that specific about exactly which deepwater driller they’re talking about. How about a couple more details?

“… the advantage our top-rated drilling company has over others in the field—the most advanced drilling equipment in the world—capable of deeper drilling than its rivals where rates are higher and potential payoffs for explorers are bigger.

“This is why the company’s stock price has surged in the aftermath of the BP oil spill—all because it has a younger fleet and is more technologically sophisticated than Transocean or its competitors.

“When you consider that it takes three to five years and hundreds of millions of dollars to build an oilrig, you can see why we think this company will maintain its leadership position for years.

“… one top analyst—next to us—has advised investors to overweight their holdings in this company ….

“The company just won a $4 billion contract for three new ultra-deep-water drill ships to be used in the Gulf of Mexico.

“When you add to that the fact that the stock surged another 8% in the past 30 days—even as the Eurozone crisis continued to slow the broader markets down—you can see why I’ve named this our August Stock of the month—all because its advanced drilling technology puts it right smack dab in the crossroads of the deep water drilling boom.”

So who is it? Well, longtime Gumshoe readers will no doubt be delighted to hear that the Thinkolator’s spitting out a very familiar answer to this teaser: This is Seadrill (SDRL), a stock I own and one that I’ve written about many times … it was, in fact, our (poorly timed, unfortunately) the subject of the very first “Idea of the Month” for the Irregulars a little over four years ago.

Seadrill is one of the largest operators of deepwater offshore rigs, and it is the most aggressive offshore drilling company and the one with the youngest fleet — t