Sunday, June 5, 2011

"Dryships (DRYS) looks to steam ahead with the boost of Oil drilling revenues and a slight uptick in the Baltic Dry Index"

Dow Jones Industrial Average 12151.26 (Down, longest stretch since 2004) 

Dryships Inc. (Symbol DRYS, $4.15) is looking good after a week where stocks just got drubbed over and over again. The stock is sitting here with a PE of 4.   Dryships is a drybulk shipping and contract drilling company.

DryShips stock shot up Friday after it got the notice of some of the Goldman Sachs folks to give it a nod as an upgrade to "Buy"

The Goldman guys (gals) are looking at DryShips as a Oil drilling leasing company with both large oil drilling platforms for lease and also oil drilling ships. I started looking at the stock because of a mild uptick in the Baltic Dry Index in the last month. This could be a real bonus.

Urs Dur of Lazard Capital Markets, in a note back in Dec. 2010 described developments as a “bevy of positive news” from DryShips and agrees with other analysts who told TradeWinds on Friday that Dryships private placement was the first stage of an IPO for Ocean Rig (their drilling operations).
He said: “Given that much of the unresolved financing pressure has been alleviated on Ocean Rig (including the recent announcement of a $325m bridge loan and the recent completion of DryShips’ $350m ATM transaction), and that DryShips has significant built-in growth in a deepwater drilling sector that is firming, we feel that a public spin-off of Ocean Rig from DryShips in the new year is much more likely today.”

Dryships is projecting 2012 earnings of $0.97 cents per share.  The company has a 5 year growth rate of 26+ % and Net profit margins of 35%.  DryShips Inc , a Greek dry cargo transporter and oil driller, said its drilling unit won additional contract days for one of its rigs from Borders and Southern Petroleum, taking the total contract value to $126 million. Earlier this month, the company secured a 90-day contract for Leiv Eiriksson rig from British explorer and producer Borders and Southern Plc for drilling offshore the Falkland Islands. DryShips said Borders & Southern have declared two optional wells under the existing drilling contract for the harsh environment drilling rig Leiv Eiriksson, owned by its unit Ocean Rig UDW.

Ocean Rig, which has secured contracts for all of its initial newbuilding drillships, is expected to list its shares in the United States and in Oslo, DryShips is looking at a valuation for the majority-owned subsidiary at $25-$26 a share.

I would buy this stock for a trade here and take your profits when you have them. I would expect a 33% return on the trade.

So going forward I will be looking for quality stocks that have been beaten down over the last few weeks, that may be good additions to your portfolio. Onward and upward.

That's me at the Wyndmoor Memorial Day parade this year. I am standing next to a 1967 GTO that was the same year and gold color as my old car. There is nothing like cruising in a muscle car on a nice breezy day.
 Have a good week and enjoy the summer


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