Mike, nice poem that you wrote for Ken. LOL
Regarding CERN, why it went down today is entirely due to management talking the analysts down CERN actually beat estimates. The stock carries a high PE and it's paying the price. I would watch from the sidelines until they regroup.
The Amigo portfolio is doing well thank you.
angelfire.com
Morgan Keegan initiated coverage on APCO with a STRONG BUY rating !!!!!
DHI received approval to go ahead with its merger with Continental. Wall Street loves this merger and the stock should reap some immediate reward in the next few trading session. The news:
Thursday February 5, 1:25 pm Eastern Time
D.R. Horton ,Continental deal gets OK
ARLINGTON, Texas, Feb 5 (Reuters) - D.R. Horton Inc said Thursday it received notice of an early termination of the statutory federal waiting period for its merger with Continental Homes Holding Corp.
D.R. Horton anticipates closing this transaction by March 31, the company said in a news release.
D.R. Horton said December 19 it had agreed to buy Continental in an exchange of stock that values Continental's shares at $44.50 each. The company has 6.86 million shares outstanding.
The merger of the two home-building companies will create one of the largest single-family homebuilders in the United States.
The waiting period for the merger was that required under the Hart-Scott-Rodino Antitrust Improvements Act.
>>>
Our oil service stock, ESV could not hold today's gain due to some profit taking, but held yesterdays. The stock was mentioned in Barron's Weekday Trader:
Weekday Trader -- Barron's Online February 4, 1998
Deep-Sea Diving for Bargain Drillers
In the last three months, oil service stocks have gone from being the toast of Wall Street to just plain toast.
Among the very best performing stock groups going into last November, oil drillers have done a cliff dive since then, as growth in day rates showed signs of slowing, insiders dumped shares and -- in the coup de grace -- crude oil prices unexpectedly fell out of bed.
While bullish analysts and commentators kept pounding the table for these stocks, some drillers fell more than 40% from their 52-week highs in that short time. (They've come back a bit from their lows.) The Dow Jones index of drillers is down about 13% so far this year, putting it 95th out of 96 industry groups. The oilfield equipment and services group ranks 94th.
Now some brave souls say there may be a few live bodies among all the wreckage. And the best place to look may be where the Titanic itself lies -- at the bottom of the ocean.
Deep-water drillers -- the companies that help the Exxons and Mobils of the world hunt for massive "elephant" fields, often in remote areas of the ocean -- are less exposed to the vagaries of crude oil prices than other drillers are. Deep-water drilling projects tend to go on for much longer stretches, five to 15 years from the development phase to the start of drilling. That means oil producers can't put them on hold every time the price of crude drops below $16 a barrel.
Also, as the more accessible sources of oil are pumped dry, producers will have to go even further afield to find crude, creating a positive long-term outlook for deep-water drilling.
"We are going to see a flurry of deep water exploration and development over the next three years or so," predicts Thomas Marsh, managing editor of Houston-based Offshore Data Services, anindustry publisher.
So, although crude prices have fallen and could fall still further, UBS Securities analyst Wesley N. Maat likes Transocean Offshore Inc. and Diamond Offshore Drilling, both of which are highly leveraged to drilling anywhere from 3,000 feet to more than 5,000 feet beneath the ocean. Over 90% of Transocean's earnings before interest, taxes, depreciation and amortization (EBITDA) come from the deep-water contract-drilling business, he notes. For Diamond Offshore, it's over 80%.
The shares of both drillers trade at about six times their estimated 1999 EBITDA, toward the high end of the group's three-to-seven-times EBITDA multiple. But that shows some investors are starting to take notice. Indeed, while shares of many of the better-known U.S. drillers, like Rowan Cos, are off 35%-40% from their 52-week highs, Diamond and Transocean are off "only" 30% or so. The whole group rallied Wednesday, and Transocean closed at 43 1/16, up 2 13/16, while Diamond Offshore rose to 46 5/8, also up 2 13/16.
The deep-water drillers' projected earnings growth isn't bad, either. Analysts expect Diamond's earnings to grow 65% this year and Transocean's to 112%. (They are expected to show earnings growth of more than 30% next year.) The shares of both trade at about 15 times their mean estimated 1998 earnings, according to First Call, while the rest of the drillers trade at about 11x-13 x.
But these two deserve such a premium because they'll be among the last to be hurt if crude prices fall further and stay down, says Bryan Wall, a portfolio manager at Munder Capital Management in Birmingham, MI, who owns both stocks. And the longer-term trends in the business certainly seem to be in their favor.
(Another driller that could do well in the current environment is Ensco International Inc., according to John Tozzi, president of Cambridge Investments Ltd., in San Francisco. At 6.5 times 1999 cash flow, it's near the low end of the group's range, and the company will earn $2.65 a share this year, up from $1.67 in 1997, Tozzi says. More
importantly, Tozzi believes Ensco has the best management, the cleanest balance sheet and the lowest selling, general and administrative expenses in the industry. |
