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Oil prices vs Oil stock prices. Interesting chart enclosed at the bottom of the article. Pretty much says that oil stock prices (for S&P oil stocks) are overpriced (historically) vs the current oil price. Oil would need to be $73/barrel to bring the ratio back to average.
http://biz.yahoo.com/seekingalpha/061130/21525_id.html?.v=1
Berliet...ALY...I took the opportunity this morning and just sold everything I owned from $19.95-20.40. I'm concerned that the temperature is going to be moderate in the Mid-west by the middle of the month again. I see natural gas slipping. I also see OPEC coming out on the 14th and saying no cuts for now. I may miss out on the next leg up on ALY, but I've seen too many pullbacks. When it recently hit over $19 and then went back to the high $17's I was lived with myself.
If it dips again "I'll be back!"
Dave
Berleit...ALY...I don't know. I'm 100% certain they'll close the deal. They already have prelimary financing from Bank of Canada. They've discussed that the latest acquisition (if they bring utilization of equipment from 30% to 40%) will bring their overall Rental division (1 of 5 divisions) to $100M EBITDA or more. However, they have a lot of interest to deduct from that before getting to net. Also, it bothers me that they are talking about 38% tax bracket for 4th quarter and 2007. They are just paying sooo much for the newest acquisition is my problem. I think about the $90M they paid for the rental acquisition in January and was pleased with it. This is $300M + deal (with shares included) and I don't think it is quite as good of a deal. However, it involves more off-shore and deep well drilling service equipment which diversifies them well. I'm afraid that they'll do another secondary offering to pay down the debt (they want to do an EBITDA vs debt ratio of 3:1). Last time it killed the stock price. After the latest acquisition they will have $600M debt. I'm not sure their EBITDA will reach $200M next year. They also will probably want to continue acquiring companies to increase their foreign exposure.
I hate to say this, but I like FTK much better than ALY. However, I own tons of ALY and NO FTK! FTK's growth is based on their new automated manufacturing facility. ALY's growth is based on labor (which they admit is getting more expensive to hire) or on equipment. FTK still has low float vs ALY's ever increasing number.
However, ALY is becoming a "jr" SLB. It holds a lot of appeal to institutional buyers. There are 1.8M shares short on a stock that just hit a 52 week high. Good luck covering cheap. There was that article awhile back (in Money.com or somewhere) where they put ALY as the #1 pick for oil service stocks over the next few years (FTK was #2). I'd reverse the order IMO. Either way, you can't go wrong. However, ALY I think is better short term (next week or so) due to breaking above $19 range. I major push could easily put up into the $20's.
NOTE: I patiently waited all day and took 7K shares off of the table at around 3:50pm today (Eastern time). It was just below $18 earlier this week so I promised I'd start to take some profit on the next run (My average purchase is around $10.50---longterm gains at that). I still own a boatload though and may take some more profit, but will carry the majority of it into 2007.
PS. I think your $2.63 EPS has a chance with improving margins (the rental division is going to be a serious cash cow). I think your sales number is a bit high though. A lot of it depends on natural gas prices and whether ALY can increase their prices to customers in 2007.
PPS. One of the big brokerage houses came out this morning and said that natural gas drilling in 2007 needs to increase 12% from 2006 just to keep output at the same level in the U.S. (because wells don't produce as long as they used to).
Dave
Oil Service Stocks....Thanksgiving finally showed up for me. ALY closed at an all-time closing high ($19.25)---didn't hit an intraday high though. There are 1.8M shares short on it (as of Nov 10th). Too bad for them.
FTK bounced off of $25. Should of snagged some yesterday!
May tommorrow's NG reserve update be a suprising withdrawl.
Dave
bbotcs...I did see on CNBC where they talked of the companies in the S&P 500, Haliburton and Altria are the top two with foreign income %. Not microcaps, but sometimes big caps are better if the market weakens (easier to get out of if nothing else).
Dave
bbotcs...GIFI...Gulf Island Fabrication...they fix oil rigs. They did $90M and 75 cents/share last quarter ($32 stock). They have a backlog of $400M. I am also keeping an eye on them for a pullback.
I really like FTK. It's just everytime I buy something like that it pulls back and "fills the gap". There really is no resistance between $23 and the upper $19's. I'm not saying it will get there though. I may have to pony up and pay the price. In the end, if it goes to $50 in 2 years does it matter where you buy at? I'm just frugal and want my own Xmas sale!
Dave
2morrowsGains...FTK...I'm still waiting patiently. I want to see what happens when it breaks below $23 (if it ever does). Another solid company is stock symbol, HP (this is not Hewlett-Packard). They are a drilling rig company. The make, what is considered, the best drilling rigs in the business and then lease them out. They get a premium on day rates and have orders already lined up for next year on their "Flex" rigs. Currently $25.45. P/E is low. Trades on NYSE. I don't own any, but am eyeing it, especially if it gets back below $25.
Dave
Wadegarret...HSOA...I've changed my tune on it lately. Actually, I'm rather liking the stock at the $5 range (I even bought some today). I picked up 5K at $5.15. I see the risk/reward of it being pretty good. Some big-name solid institutions bought cheap shares last quarter. I'm figuring this stock will run up over $7 in the spring at the latest based on speculation over the next hurricane season. (They are predicting a colder than normal winter in the northeast, especially later in the season. This is because the weak El Nino is expected to diminish in influence. This will then be less of an issue next summer). I'm not going to wait till summer to sell though. I'll sell when the johnny-come-latelies jump on board for the next round "to the moon" (or whatever their battle cry is). I bought IPII a couple years ago in December when everyone was bored with it and sold it in the summer for a killing.
I did listen to their CC call and read through the 10Q carefully. There are some problems, but I can name 50 stocks on this board that have more questionable problems with them. They are profitable and growing. Management was grilled pretty good in the CC call about A/R, credit, and such. They weren't direct in their responses, but the answers where solid. They definitely would get themselves in trouble on some of those yes/no questions if they were lying. So overall I was satisfied. They need to get a few quarters of honest numbers under them. If they start collecting on their accounts receivables then the institutions will bid the stock price up.
Overall it is a good play on a beaten down stock. I don't think it is going to move significantly anytime soon (with tax selling season here). However, I'm patient.
P.S. I glanced at your old posts. For your credit, you haven't like HSOA until it was around $5.50 all the way to $4.56. So anyone buying on your recommendation is doing alright. (Unlike your first BBC recommendation above $13!!! But that's another story).
Dave
Wadegarret...actually your stock picking ability is doing well. You nailed HSOA at the bottom at $4.56. You could have sold multiple times above $6. Even BBC would have given you a 10% return when it was in the $10's a couple times. I think the problem may be you're trying to hit doubles and triples in a stock market environment where you should be just going for singles. I always say that 3 singles = 1 homerun. The real "bull market" for value microcaps is past. We are now in more of a swing environment IMO.
Your stock picks run up before earnings then give back. Heck, you could be picking stocks that go down before earnings and then continue onward! That would truely suck.
For BBC, remember that they should be reporting sales for their conferences at the end of November/early December. They did it the last two years and it benifited the stock then.
HSOA looks to be stabilizing.
GACF.OB bounced back with strong support. I think over 1 year it will do well (not necessarily 1 quarter because it may take time for Avolar #'s to hit the bottom line).
Dave
10 bagger...it'll be interesting to watch oil/NG/service stocks next week. NG prices & Jan-Feb oil contracts are doing very well today. I think there will be a lot of volatilty both directions in oil service stocks. Good to play short term if you are quick. Long term, I'm not so sure of $52/barrel oil. I don't see OPEC and the middle east selling their natural resources to the U.S. cheap. I'm probably wrong though. It's just, why sell 8 million barrels of oil for $50 when you can sell 6.7 million barrels of oil for $60 and net the same? You then have more in the ground for the future. It all depends on if OPEC has learned their lessons and whether they like their position of power in the world.
Dave
LMC...at what level do people think is a good price to buy in? Has everyone gotten their EZM shares???--will it cause more downward pressure?
Don't own any, but putting it on my radar as a diversification stock.
Dave
IPII..an old board favorite is down $2 in A/H trading to a 52 week low of $9. Seems the housing slowdown in Florida is reducing business revenue.
Wadegarret..BBC..I'm sorry to hear it. I've found a lot of your stock picks to be well thought out and intelligent choices. However, what suprised me with your take on BBC is is that when rats were continually found in the kitchen, you still insisted the food was going to be good. Then you blamed a city inspector for questioning the cleansiness of the kitchen. Sorry for the poor metaphor, but it illustrates the point. Management needs to be 100% honest and trustworthy. Peter Lynch always said, "buy management, not the stock".
You may prove me wrong with HSOA tommorrow. Hope you do.
USHS..reported numbers tonight..27 cents for quarter (they are seasonal, stronger in summer, weaker in winter). I mentioned this stock 1 year ago on the zipcode board (back when it wasn't profitable yet--it was $5.40 then vs $9.90 now). Analysts predicting around 95cents for 2007. Company is projecting 20% growth rate for next year. They are in 1290 Home Depot stores for kitchen & bath refacing & around 500 for decks. A couple interesting things from the CC call:
1. In his 46 years in the industry, CEO said that they do much better in poor housing markets and higher interest rates. He said that from numbers he looked at this morning that they are doing very well in Florida and California as an example. (He's mentioned this before---it's due to owners improving what they have rather than chasing new houses). He said that he wished interest rates were actually higher.
2. They are starting a new pilot program with Home Depot to provide kitchen countertops in their Boston Market during 1rst quarter 2007. If that works out well he sees it expanding outward to the other stores. This could be a real added bonus to growth.
3. The are in 33 new Home Depot Expo stores in the 4th quarter.
4. They are also in the process of starting a new marketing campaign that works with Home Depot, but is more directed by USHS instead. They tried it in 3 major markets and were pleased with the results and will be expanding it.
This isn't an exciting company, but plugs along nicely. I've found the CEO to be straightforward. Minimum dilution in shares per year (options expenses in 3rd quarter were just $77K). It's not followed by many. Volume is around 18K shares/day. Float is 6.22M (8.4M shares total outstanding). Their "debt" was consumer financing they carried for customers. They just sold it all off for $50M the other day (but $900K worth) so they are debt free. They are fully taxed (35-8% bracket).
Dave
Good article on housing vs economy from Yahoo. I like the part about if refinancing (and the resultant borrowing of more money against a house to purchase more crap) ends it's worth a $300B hit to the economy.
http://biz.yahoo.com/weekend/ecslump_1.html
bbotcs...ALY...how are rising interest rates going to hurt ALY when 90% of their debt are bonds with fixed 9% interest? I will agree with you that FTK, with no debt, is appealing.
Dave
bbotcs...FTK...I listened to a replay of their CC call today. If you just want FTK for your PSL4 contest I wouldn't bother. If you plan on making real money, definitely listen to it because "wow". The Q&A about the chemicals sounds like it is going parabolic in sales (in 2003 they did $1M for the year, now they are up to $1M per week and have been told by their customers to ramp up production). Drilling rates are pretty insignificant when this is doubling production for their biggest customer who plans on taking it international. I still will wait for boredom to set in before I load up. Sitting on my hands and waiting is the best thing I do!
bbotcs...FTK...My thought on FTK is wait till the excitement dies down and winter boredom sets in. FTK bottomed at $14.55 on July 19th, then after 2nd quarter earnings it hit $20 on July 26th. Then everyone got bored and sold oil/ng service stocks. FTK bottomed at $13.60 or so on September 11th. Now it is back over $20. I'm not big on timing the market, but if you are patient in buying and selling a person could follow ONE STOCK and make a great return. I think that NG supplies and high reserves are going to continue to cause service stocks to be volatile as heck for the next quarter or two again. FTK doesn't report again till March or so. In the next few months there will be a killer opportunity to buy again, but patience will be the key.
((Look at DXPE. In the same time period in went from $22 to $35 back to $22 now almost $30. ALY is just as volatile))
Dave
bbotcs...FTK...yeah, but it's up over 30% since September 11th. (Low for the day was 13.55, closed at 13.75) Nothing shabby about that.
R59...A good example for NG is Aspen (a favorite on this board, or was at one time). From their Annual Report: estimated NG reserves June 04 = 2.534Mcf, June 05 = 2.278 Mcf, June 06 = 2.7 Mcf. If you know anything about Aspen it's that they hit about every damn well they drill. Yet even with this they still don't increase reserves much. It's because the wells hit less amounts and run out quicker.
People worry about NG drilling drying up. Hmmm....If Aspen doesn't keep spending money on the search for more NG, the company will completely run out of reserves (at their current drawdown) in about 4-5 years. Completely out of business. That's why it never gets a premium in stock price because if they don't keep their success rate up the company won't be around.
That's just one example. Multiple that by an entire industry. That's why even the big boys (HAL, SLB) in their CC calls said that, even if we have a mild winter and drilling decreases, it'll clear itself up in a quarter or two. Because long-term these companies MUST drill to survive because their reserves aren't great enough. If noone drills, then excess storage will get used up quickly and then the problem of decreased production comes into play.
As for where prices go on NG....I don't know. I'm suprised at the run-up in futures this month. I have to admit that I am enjoying those Arctic fronts starting to roll down early. People say that the mid-west will be warmer, but that doesn't include Chicago, all of Michigan, Illinois, Wisconsin, Ohio.... A lot of NG users in those states. Hell, a cold spell in Chicago is worth the entire states of Nebraska & Kansas combined!
Dave
NG production is DOWN not up. Between April 14th and October 20th, the 5 year average of NG added to storage reserves is 2093 bcf, the amount added in 2005 (with all the hurricane problems) was 1792 bcf, the amount added in 2006 was 1747 bcf!! The problem was that NG reserves on April 14 in 2006 were so damn high due to the mild winter. If we had not had the "warmest" winter on record last year (and rather a normal winter), we'd be hurting for certain right now.
The 5 year average for closing out winter reserves (in mid-April) is 1083 bcf in storage. If we'd closed there this year and then only added in 1747 bcf production (the actual production numbers for 2006) our total would be 2830 bcf right now going into winter (which would be 10% below 5 year averages.) NG futures would be on fire right now.
True, we have record reserves, but if anything were to draw them back down then look out!
http://tonto.eia.doe.gov/oog/info/ngs/history.html
Researcher59...NG prices...something to think about. NG reserve differences between April 15, 2005 and 2006 was an amount of 430 bcf extra in 2006. Obviously this was because of the mild winter not drawing down reserves.
Here's what's interesting....Even without any hurricanes slowing production down, the warmer summer we experienced drew down the difference of 430 bcf from April to 314 bcf as of today (comparing 2005 to 2006 still). (Remember the first drawdown in the summer ever this year). This is without any hurricane whatsoever slowing production numbers down this year compared to the big slowdown last year. Overall, not a big deal, except if we get a normal winter drawdown (or slightly greater amount if the El Nino affect is weak) and a hot summer again.....there may not even need a strong hurricane to make NG a play for next winter big time.
No one was concerned about lower summer addition this year due to the surplus, but what if there hadn't been the extra reserve? The need for increased electricity in the summer could start to make a difference in the future. Maybe not even next year, but eventually NG reserves will get drawdown to normal levels and then there is going to be increased concern on the ability to build them back up again.
Something to think about.
Dave
Nelson1234...ALY..."GO BIG OR GO BROKE!" Wow, talk about agressive.
From their DSL acquisition in August: "Mr. Alejandro Bulgheroni, Deputy Chairman of Bridas Corporation added, "We believe this strategic alliance with Allis-Chalmers, once consummated, will enable the newly combined operations to benefit from DLS and the Bridas Group's long standing oil and gas activities in Latin America, Central Asia, Russia and the Middle East."
That's from the Bridas Group which is in bed with BP and Unocal:
http://www.boston.com/business/articles/2005/11/29/argentine_energy_firm_catches_chinas_eye/
Maybe all those guys wanted someone to get in bed with them also (i.e ALY) which will bring the rental equipment. ALY will now have enough to spread around the world if they care to.
Again, go big or go broke. At least it's not boring.
Dave
Nutsaboutgolf2001..NG prices..The November contract ends this week. Hedge funds have switched gears and are doing the opposite of the Amaranth debacle and forcing those that may have been short to buy and cover before the contract ends. Look for it to retract next week. However, I think the sub $6 days may be over with for the winter.
Dave
OT...Argyll...A lot of people don't like E*trade. I like their security key that changes the password code every 60 seconds. My only question is it specific to me or in general? Because if it is in general than a hacker only needs to have one also.
When Vista comes out I'm going to get another computer and use that one for general use and convert the one I have to financial transactions only. No reading e-mail, no web surfing, nothing but paying bills and connecting to my broker. It's a bit draconian in measure, but holding onto my money is important to me. (Besides, I have the room and want a new computer & monitor so that'll be my excuse!)
Hindsight is 20/20, but we are in the business of foresight!
Bobwins...El Nino, "weak vs strong": Accuweather had another interesting article on the effect that a weak El Nino has on winter (which is what they are predicting) vs a strong El Nino.
From what's happened in October, it seems to be playing out.
http://headlines.accuweather.com/news-story.asp?partner=accuweather&traveler=1&article=7
OIH options...$130 options for October (that expire tommorrow) are up 175% today. Not too bad.
Dave
OT...FinancialAdvisor...penny...if they eliminated the penny then you would need to plan on looking for a small increase in inflation because everything would get rounded up to the nearest 5 cents, not down. On the other hand, productivity would probably increase without the time spent counting out each cent!
Dave
Accuweather.com's winter forecast posted today. They don't see the El Nino affect as much as National Weather Service does.
http://headlines.accuweather.com/news-story.asp?partner=accuweather&traveler=1&article=9
Niles_crane3...ALY...It'll be interesting to see/hear their quarterly results. Management must be pretty pleased with how things are going/projected to go to pony up another $28M for an acquisition. Remember, they can always shift equipment to Argentina now. We'll see. Also someone else commented on the 50% utilization rate. With rental equipment, the industry average is around 40-45% if I remember correctly. It'd be nice if it was 95% like rigs, but you need to continually shift the equipment more between job sites.
Either ALY is going to BOOM big! or Boom (as in implode!) in the next couple years.
DXPE or ALY....If someone was smart they could do damn well playing these stocks long/short depending on what cycle they are in. Well enough that you wouldn't have to follow anything else. DXPE now over $28 and ALY over $15.50, both around 25% off of their lows of just a couple weeks ago. Too bad it's not me!
Dave
INPC...I see where Goldman Sach's has made a big buy in lately (now over 13%, a good portion of that coming this summer near lows). Anyone have an opinion on it? Revenue is ramping up nicely. Float isn't that large--which is a plus. If they could ever get anything to hit the bottom line it could end up pretty good.
Note: I don't own any. I see where it is at $8. If I did make a stab at it I'd wait for a dip in the market and try and pick it up below $7 if possible before next earnings. It may even be better to wait till after earnings (around November 2nd).
Wadegarret...BBC...I wouldn't compare BBC to HSOA. I think Herb Greenberg is more reputable than Stocklemon. Also, one is a Chinese smallcap company and the other is in the U.S. BBC may recover, but it's not going to be by instituional buyers but more by speculators who are guessing. At least with HSOA you can drive to the company and talk with them in person and check out the facilities. The average person doesn't know what's going on in China. Both are risky, but with HSOA the risk can be reduced through onsite inspection and conversation and personal DD. As such, HSOA is more likely to be bought by mutual funds if it is legit. What I'm saying is that both companies need LARGE reputable buyers to support the price--I think HSOA has a better chance at it if they meet guidance. Also, what institution is going to want to show BBC on their books after the catastrophe of Amarenth?
Bobwins...CHK...You nailed it on the head when you said that it is worth more in the ground. There are some out there that think oil will go to $40-50 or so. I doubt it. Over the next 20 years would you rather have oil in the ground or U.S. dollars? It doesn't benefit countries anymore to keep selling for money when the price starts to drop. Take Venezuala. A rather insignificant country except for its natural resources. Sell all of those cheap and you're back to being nothing again. No, in the future natural resources = power. Just ask Russia. They've come back from the brink because of it. Same thing for U.S. companies with reserves of natural gas.
Clearcoated...gasoline futures...good article... Also, today they released inventory numbers. Oil reserves barely declined while gasoline reserves increased 6M barrels. Hmmm (especially when refineries were only running at 92% of capacity). Sounds like huge amounts were imported in to make the market flush with gasoline. Why? Because the stock market loves two things...no changes in politics and having people flush with cash for the Xmas season. That's why consumer confidence is unexpectedly high and the Dow will break records. The conclusion is that there are always forces behind closed doors at play.
Oil & Gas Drillers workload............
http://biz.yahoo.com/ap/060922/oil_and_gas_drillers.html?.v=1
sskillz1..OT..hurricane...The cold fronts coming off of the eastern U.S. are what's pushing any/all hurricanes back to sea that have formed in the Atlantic. I wouldn't be worried about anything forming there and hitting the U.S. at all anymore this season. The only concern really for the U.S. is one that forms in the Carribean. On that note, there is a tropical wave with a low that is expected to enter the Carribean on sunday. Slight rotation is evident located around 55W 13N. This doesn't mean anything really, but I'd hold off till monday/tuesday to buy anything to see if it does. This is one of the first low pressure systems to make it this far in awhile.
Researcher59...congrats on the futures trade. Remember though that one of the reasons NG futures are $4.70 is because Amaranth was forced to liquidate a huge position into the market (I'm sure his fellow hedge fund buddies made a monster of a profit on him). Oct contract ends next week. Nov contract is over $1.30 more. You may be right, but one early cold spell and all your profit will be gone in about an hour.
Stock_peeker...It was a 1 for 4. eom
ALY...I'm suprised to see ALY management wasn't able to make the Morgan Keegan Equity Conference that they were supposed to present at today. They posted on their website this morning that they couldn't make it there for their presentation. Maybe they are busy!
Dave