A kid in the ''Oil Patch Candy Store'' ...
RGinPG, concerning your comments on the boat/fab stocks:
I really like the boat stocks from a valuation standpoint. As someone mentioned earlier, it seems the stocks with low PE's (sub 14) that are still 1/2 off their 52 week highs, may hold the best promise. I like TDW as an industry leader, no debt, tons (tankerloads) of cash, low PE, high margins, consistant earnings and traded near 24 month low recently (when I bought). HMAR I liked because of the smaller cap and high growth nature, like their lock on ''Jones Act'' tankers, new tug design, venture @ New Port News and move to International markets. DLJ had a nice internal BUY recommendation and Analyst review on them. HLX I really liked due to price disparity to FGII. I love FGII, just felt uneasy with ''chasing a leader'' being new into the sector. I would love to buy FGII on a dip, but do not see any major dips in their future...$36 or so, would be nice - just do not expect to see it again. HLX had an order backlog of $733 million which exceeded their prior years sales; this locked it for me, along with 50% earnings growth projected for next year.
I was considering selling NE & GLM to consolidate to stronger position in FLC - my favorite long term hold in drillers. CDG also seems unstoppable lately and I thought I would add to my position in Cliff's to ride the MO-MO, while GLM and NE seemed to be lagging. DLJ came out with some info that NE may have some contract rollovers shortly, that would be replaced with much lower dayrates, hurting near term earnings. I love the fundamental numbers on NE, super margins @ 37%, very good return on Equity & Assets. They just seemed to be trading closer to their prior high than others like CDG. I should hold, as nothing fundamentally has changed. GLM has lagged, I agree with your comments, I'm holding only due to improbable ''buyout'' rumors...
My initial thoughts are that I am holding 17 oil driller and service stocks and am leaning to consolidating to 10-12 to concentrate on the companies that will receive the most benefit from the coming sector rotation to oils.
ESV is the most interesting company that I do not own. Very consistant player, excellent fundamental numbers; just not breaking out.
CDG seems to be my biggest surprise; PE is still relatively low to peers and good earnings growth going forward. Cliff's seems to be the mover to me.... still alot of upside to $85 !
Feedback please; is holding 10-12 drilling stocks too many ? My thoughts are that FLC would be a long term hold, with DO, NE, GLM covering the deep area, which looks to be the best area to be near term. CDG was a fundamental gem and has performed. Bought BDI as a small cap/high return long term buy, UTI and PKD as pure value plays, way off highs and low PE's. PTEN seemed to trade at high volumes and have strong Analyst following, with strong upside. I wanted to balance my drillers with service stocks like ESV, PDS; bought MIND off bad news, investor suit, low PE and way off prior highs - great upside here. Bought OMNI & TCMS as small/micro caps that looked to have great growth, market niches and super upside. I thought I would just tuck away OMNI, TCMS and BDI for a few years.... Hence my problem; hard to cut back when you're happy with all you bought.
Coming from the Bank/Financial sector - I was like a kid in a candy store; 3-4 deep drillers, a shallow driller or 2 for balance, a seismic company, couple of boat & fab co's, a pipe co', couple of land drillers, natural gas exposure, couple of micro's..... sure gets to be expensive shopping. Hanging my butt out awfully deep in the Oil sector, but I can hold lonmg term and it is just a matter of time before crude prices rebound. I also beleive some of these companies have proven they can grow earnings @ $14-$15 oil. |
