Re: Oilpatch
Among the small caps, hard to see one. But among the mid caps I see quite a few. "Small cap sector leader" to me is an oxymoron. Among the mid-caps I see Tidewater (TDW) as a leader of its sector, with the only strong, debt-free balance sheet among its competitors.
Among the drillers, Diamond Offshore (DO) and Noble Drilling (NE) have strong balance sheets and are sure to survive until the next cycle. Transocean Offshore has a weaker balance sheet relative to these two but which is still nevertheless strong enough to survive a lengthy downturn, IMO.
These are all $1 to 4 billion companies. And the market, IMO, despite overselling them, is still placing relative odds on their ability to survive. You can see this by simple PE on average earnings. TDW seems the most expensive of its competitors, but it's the only one that definitely will survive a lengthy downturn. Even among DO, NE, and RIG I see the market valuing them correctly in the relative sense if not the absolute. NE is more "expensive" than DO which is more "expensive" than RIG, which is how I see them as far as safety.
Disclaimer: I own all of the above, having recently bought them at prices a little below the current levels. DO I own via Loews (LTR), which owns a 50% stake.
In the portfolio at ValueStocks.net, I own LTR, NE, and TDW.
Good investing,
Mike |
