It's hard to have an opinion on what someone's opinion will be in the future, and trying to understand what motivates analysts is even harder. But when oil begins to look like it's really trending up then upgrades for the land drillers are probably automatic.
If I were the analyst, I would give it a strong buy now. Earnings are growing 50% in the bottom of the energy cycle. It is only likely to get better from here and unlikely to get any worse. The stock is at a pe of 20, in line with the market, but with present growth about 6 times the market (I think). In the call, they also said cash is about equal to debt. So they have plenty of room for financing acquisitions and they have a history of accretive acquisitions and continuing intentions to do so. It's a no-brainer for me, but hey, I've been wrong before.
I do think that UTI is likely to appreciate nicely during the balance of the year without much pe expansion. I am guessing that we'll stay around a pe of 20-25, but once commodity prices move up, which is really hard to predict, then we'll see pe expansion and greater earnings growth along with tremendous gains in share price. I don't believe that this is likely before 1999, but now is the time to have the money parked in UTI IMHO.
007
PS I think we're all in agreement that honest opinions, no matter how bullish or bearish, are valuable to the thread. Manufacturing rumours and manufacturing news releases is simply not acceptable. |
