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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: jbe who wrote (16868)	3/27/1998 1:14:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 95453

jbe, very interesting post! I think the central valuation issue is the present value of free cash flows. Having a negative free cash flow implies the need to see it turn positive in the future as projects mature. I guess what I'm trying to say is you need to look at multi-year cash flow projections not just one year projections, and as you increase the debt to fund projects you increase the risk of the company. So the question is: why do ESV and TDW represent such compelling values on your screen? Well, I shied away from TDW because, as I understand it, the company is heavily involved in the supply boat business, and many feel there is a good likelihood of a surplus of these vessels this summer. If that's the perception it would certainly decrease investors' estimates of future cash flows -- say two years out. With respect to ESV, I agree. using every criterion I can think of it looks like a compelling value. Regards, Paul

To: jbe who wrote (16868)	3/27/1998 1:36:00 PM
From: Tulvio Durand	Read Replies (1) \| Respond to of 95453

A MM whose judgement I respect had this to say, " When great fundamentals don't mesh with a poor-looking chart, trust the chart. The chart is trying to tell you something -- ie., something's wrong, -- keep away". The MM is Gerry Klein, on San Diego radio stock-talk. Tulvio

To: jbe who wrote (16868)	3/27/1998 1:38:00 PM
From: Czechsinthemail	Read Replies (1) \| Respond to of 95453

jbe, Thanks for sharing your scan results. One word of caution is that these essentially provide you "looking backward" results and may not be indicative of the "looking forward" world that the market is trying to predict. A possible oversupply of boats, for example, is an area of potential concern that may temper investor enthusiasm to go into these companies. Also, many companies are investing heavily in construction projects. That may affect the debt and cash flow figures in the short run, yet be a net positive for the company in the future. Also, be aware that shallow drillers and boat companies will likely show higher return on equity than deep drillers during periods of rapidly rising dayrates, but eventually returns for the deeper drillers will likely catch up. I guess what I'm saying is that it is helpful to consider some things that strict number crunching won't provide. I think ESV is an excellent pick, particularly at current prices. But given the run-up in many of the shallow, and mixed fleet drilling companies, I think the relative attractiveness of RIG looks good too. good luck, Baird