J Clarke; re: VRC FGH - many, many analysts specifically identified these companies -
... as NOT being the plays in THIS "BOOM" - this time.
One major factor to maximize gains in THIS - Boom, is that it will not be one where unprecedented Cap Ex $ will be spent on Offshore Rig Construction.
This amazes me, that so few here get this ? Has anyone looked back at what all those $150, $200 M Newbuilds did for the fab & construction sector ? FGI was identified as one of the top growth stories etc. - what no one mentioned is that back then, one single offshore newbuild - doubled the revenue of many of these companies and as we saw a historic boom - many companies exploded in revenue. This no longer exists. It is not unlike a company that had overtime sub contracted crews working 24 x7 on the Y2K problem - but, after Y2K ended - what do they do, where will their revenue go to ? How low will the fall back to normal be ?
This was a textbook blip on the chart. Those $ DO NOT exist today and will NOT exist tomorrow - or for the next 12-15 months. This is NOT my opinion - this is what the bond people, the bankers who supply the financing and the analysts who will punish these companies & most importantly, what the very CEO's & Board's of Big Oil - who control the type of Cap Ex $ that the VRC's & FGH's need to resemble anything of their former selves; are saying. ANY fundamental recovery in THOSE stocks is 4-6 quarters away at the MINIMUM. VRC is not in the same boat as FGH imo, but the backlog speaks volumes.
FGH was undeniably a subsector leader - no one doubts their ability to design & build a fine product. That is not the point; the point is that their rise was due to a historic blip on the chart - that is all ready clearly on record to not existing here. FGH's 14% Institutional ownership is reflective and endorses the reality here.
FGH however; offeres tremendous profit potential to unemotional traders however. I think it is a great trader. I am a buyer depending on tape momenteum in the mid-low $5's and a seller & a shorter at $8ish - over & over again. I would merely raise, or lower that trading range as events dictate. FGH's run ups AND retraces will remain volatile - and it is a great short - and will continue to be on ANY and ALL bounces - period.
The behavior and actions of the Oil Majors are all anyone needs to know to realize how "this" Boom will be different.
This BOOM is about $ efficiency with CURRENT ASSETS !
Cost cutting !
Earnings !
Clean - lean & mean blance sheets !
Valued added technologies !
... heed that & your stockpicking will be well rewarded.
Big Bull - you commented on NOI long ago; I did as well, along with IIR - as THE picks & shovels play - must, core owns in THIS boom. NOI is a $40 stock in time, still not to late; but I own it in my core LT Hold acct and will only add on pullbacks - I own enough.
BJS WFT CAM SII - are the clear momenteum fav's here; with HAL BHI having an added core component of "VALUE" here and they MUST participate STRONGLY for their to be ANY real Boom 2000. - BHI & HAL - must go up 50% from here for there to be a Boom 2000 -period. I am leaning to these lower risk, no-brainer - Institutional money flow leaders; as well as the larger plays of the UCL & P's - as these now have the same % upside as our mid-small cap , over-leveraged E&P's with more Institutional rotation potential, much lower risk - and are more marginable from a risk exposure level.
VRC's backlog is really problematic and not to hammer on my fav' whipping boy company; but their's is too - and the merger assimilation & asset divestures and related financial impact is a huge unknown here and - the street hates the UNKNOWN in this environment. Play these as traders untill backlogs show a clear, substantial and dramatic turnaround - then & only then do they become core - LT holds imo. VRC & FGH are "plays" on major pullbacks to "trade" - but, these are later cycle "plays" - when we will be looking all around the sector and saying: - " gee, we have momenteum here, earnings are ramping, but nothing looks cheap anymore - I don't want to sell, but what do I buy ?".... THAT ! - is when to add the FGH & VRC's imho.
I think the early recovery plays like CAM SII BJS WFT - smaller caps like NOI IIR SESI NR KEG are solid bets, I do like seismic in PGO/VTS - on any & all pullbacks - these WILL also see a minimum of 50% upside for there to be a Boom 2000 and HAL/BHI are no-brainers ; then pick your drillers; RIG DO FLC for deep still look reasonable, others as retrace opps appear; NBR for land and add other peripheal plays as opps present themselves.
I think a strong weighting - in my case a still 65% overweighting to the E&P's for purely valuation & fundamental reasons - is called for. I think that NBL EOG XTO UPR BR APA et al - will close their return performance gap - now lagging to the OSX issues - and they have literally at LEAST twice the upside appreciation left to their prior, proven highs of late - than do the OSX stocks. For THAT reason alone (let alone superior earnings growth & their pureplay on commodity pricing) one must overweight to E&P's imo....
The reason I am not holding ANY margin here; is I want to use it for "roadkill" opps - the next FST, BSNX, BHI, HAL type of blowoffs. PGO & FLC both have some disappointing news coming - may be able to really STEAL a major trading & longterm position in these. Maybe a stock like UPR breaks down to the $8's - which is ludicrous - then I can load and really have much higher reward potential than being on margin day to day in the usual suspects here...
BSNX is a steal here, when I see clean balance sheet companies blow off like that; and I "know" that the selling was largely non-energy speciality funds - who dipped their toe's into energy via BSNX & a few others and just dumped when their momenteum model failed - THAT is the opportunities I want. BSNX is a 50% - to double just sitting for the pickings... FST as well - but, we have lots of them. Not being on margin - you have as long a list of laggards as anytime in the last 15 mos here - if, say the OSX breaks out to 95 here in a 2-3 day burst; there are still lots & lots of value/laggard plays.
Anyway - my .02 c fwiw. |
