Big 'Un; ie: CLB -- << You DO have a plan? >>
..a plan ? - Nahh; this was a ''hip shot'' ! <VBG> .....just kidding.
CLB; hmmm lets see what we have here. First fundamentally.
We have a niche leader, an aggressive acquisitor/consolidator in a value added niche - whose value of its services rises in a declining, or difficult crude Oil price enviroment. CLB is not a high debt/high leveraged company. IT has a .39 debt/equity ratio, where .40 is the cut off for a conservative rating. They have solid cash/borrowing base available, they are strongly profitable. Return on equity is 15% plus. Small float - just 16.2 M out of 28.4 M issued. The short position which was obviously enhanced yesterday (VBG) will give us significant ''pop'' potential when the shorts do cover. Shorts piled on this wounded animal yesterday - and rightfully so if shorting is your thing...
One reason I loved this play is that CLB is not a traditionally owned oilpatch stock. CLB is disproportionately owned by non-energy funds. It has been promoted and owned as a growth/value play and as a technology stock that happens to be in the energy sector. Many of these Institutional owners use models where they sell on any earnings disappointment - this give the individual investor an advantage.
These pre-programed models serve the institutions well - but they also can serve us well, when we know the fundamental story behind the selloff.
Interesting comment from Yahoo; <<The Morgan Keegan analyst pointed out today that if you adjust for special factors, earnings were .27 instead of .30, not worthy of this kind of sell off. Add to that that revenues increased 25% year over year. >>
Technically; CLB has had a series of higher lows from September. If one draws a support line under the series of lows from Sept - we are right in the expected support range. CLB bottomed at $15 11/16ths at the end of Nov/1st of Dec peak of tax loss selling. It rebounded nicely in January and when the sectorwide retracement occurred in late Feb. - CLB held a week long bottom support level of $18 7/8ths, or so... see chart link below:
quote.yahoo.com
In my mind, making a series of entries into these one day disproportionate blowoffs has been on of the most profitable trading/buying ideas.
To make an intial entry at the $18ish level was both fundamentally and technically prudent. Especially on an otherwise up/flat day in the Oilpatch - don't discount this factor. The next entry at $16ish as well; and I will sit for my final 1/3rd at $13 15/16ths which is below prior $15ish support and gives me room for a ''Gun the Stops'' type of play if we would see that. CLB is fine, just fine... this is not like buying a high debt/fundamentally wounded company - CLB is solid. This is a good longterm buying point and an attractive trading opportunity, .... time will tell.
I'm hitting about 8 of 10 on these one day disproportionate blowoffs - gotta take the swings when you get those fastballs right down the middle of the plate... !
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Hmmm; see the headline below; Oil stocks Rally - profits seen distant.
Now didn't our little professor from the Invest Ltd thread tell us that the Street would ''NOT'' look forward, and that it was all about all of those terrible present fundamentals..... Rule #1 - the Street most definitely does and will - look forward when valuing Oilpatch Stocks.
While our ''professor'' didn't get it - the real factor is that the Street will let these dogs run a bit. Remember when a Brokerage House just announced a downgrade a while back - only to say that this was so they could ''pound the table'' later.... well, see the link below from Pru.
We will get some ''leash'' here - these upgrades and the traditional inflow of cash from tax refund time will give us a boost. Sector rotation is another looming factor and Kosovo may generate some rotation if this situation expands.
The next ''idea'', or ''plan''' needs imho; to be that one should be setting price targets to continually, yes ''continually'' be taking ''some'' profits on this run up. - keywords: ''continually and some''. No need to close out entire positions, but anyone who thinks that it is not a ''when, not ''if'' situation - to where the Street will sell off this sector at the first hint of negative OPEC compliance news, or supply drawdowns is not prepared.
A 15-20% retracement off of a run to OSX 85ish would seem realistic. We look to see a OSX 72ish breakout soon and if we see no bad news and get some sector rotation - OSX 85ish is the next target. To not have a profit taking plan - with some rotation ideas as we near those levels - is to leave one merely at the mercy of the merciless Street and to leave a lot of $ on the table....
Taking profits is not a dirty word - do it; it isn't profit untill you actually take it anyway !
<<Friday March 26, 7:03 am Eastern Time
Oilfield stocks rally, profit rebound seen distant >>
biz.yahoo.com
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