From Briefing.com
15:25 ET ******
SMITH INTERNATIONAL (SII) 34 +3 3/4 One of the stocks leading the oil patch higher on the back of jump in crude prices... At $14.30 a bbl, crude at highest price since November 4th... Not only that but oil back above its 200-day moving average for first time in months... Precipitating the rise in oil prices is the speculation that OPEC will agree to further cut backs in production at, or prior to, March 23 meeting... Stronger than expected domestic economic growth and the rebound in Asian Pacific economies also underpinning crude prices... Sharp bounce in price of oil has street taking another look at battered and forgotten energy sector... But rallies into OPEC meeting are not unusual... What would be unusual, at least based on recent history, is if oil prices sustained their upward momentum after the meeting... Despite general improvement in global economic conditions, demand still not significant enough to foresee oil prices holding above $15 bbl over the near- to intermediate-term... On top of that OPEC seems to find a way these days to screw things up... Unless looking long-term, would be using recent OPEC-related pop for a quick strike only... SII, like crude, back above 200-day moving average for first time since June... Break of resistance on surge in volume sets up intermediate-term test of 38-39 area... However, traders should note that SII expected to earn $0.89 in FY99, resulting in projected p/e of 38.2 or a significant premium to the overall market... Based on stock's recent price and earnings history, do you really think it's a good idea to pay a premium multiple for the stock? Neither do we.
|
