01/14/2015 7:00 am EST


Jack Adamo

Editor, Jack Adamo's Insiders Plus

"Buy straw hats in January." "Buy when there's blood in the streets." We've all heard the familiar words of the world's greatest investors, recalls Jack Adamo, editor of Insiders Plus.

But it is difficult to heed that advice when your gut is twisted with fear. Today, that's the battered energy sector.

Ensco PLC (ESV) provides offshore drilling services. It is ranked first in total customer satisfaction with top honors in eight of 14 categories.

The company has the largest premium jackup fleet in the industry and boasts the second youngest deepwater fleet.

This is important because the new rigs are more efficient and safer, a huge selling point since the Macondo disaster in the Gulf.

Q3 diluted EPS from continuing operations rose 12.5% YOY on an 8.5% revenue gain. Its 27% debt/capitalization is the lowest of the six major drillers.

With the recent crash in crude, the stock yields 10.7% with a conservative payout ratio of 49%.

Until its recent pullback, Ensco shares produced a total return of 10.9% compounded annually for the last ten years, comfortably beating the market. The stock sells for just 8-times trailing net earnings.

Oil prices won't stay low forever; this stock is a steal. Buy Ensco plc. up to $34. It is also a great candidate for writing out-of-the money calls at high returns.

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