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
