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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: HB who wrote (36703)	11/18/1998 11:37:00 AM
From: Knighty Tin	Respond to of 132070

HB, I saw the piece. Cherly went out of her way to point out that the Asarco guy was a crackpot. I happen to agree with the crackpot. I know, what else is new? <G> I believe the same issue of Barron's, or the week previously, had a nice editorial about the soon to be oil shortage. I can't say I agree about the timing, but the shortage, IMHO, is a certainty early in the 2000s. Also, the same author responded to comments about alternatives and answered with the factor nobody mentions, price. Yes, you can use natural gas or ethanol, but the cost is exorbitant relative to the current price of oil. Since his response was just to the left of my letter, I read it. <G> I don't think book is relevant for service and drilling cos. I do think cash flow and cash holdings are very relevant. They have to be able to survive the downturn. I also think that most going concerns are subject to a takeover at these prices. The bigger firms have excess cash and this is the time they go hunting for bargains. The key I look at is "normalized" eps. You cannot treat a services co. like a dog on the downcycle and you can't treat it like an internut stock on the upcycle. You have to look at what they will avg. in real eps over the entire cycle. I think they have $3.00 per share eps earning power at the top of the next cycle. And an avg. eps of $1.75 over that cycle. At $11 and change, that looks awfully tempting even in this downswing. MB