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Why Cal Dive is Unlikely to Dive In Price (CDIS) 05/02/2005
Oil Services and Exploration outfit, Cal Dive International (CDIS), is a regular in our Intrinsic Value screen. It closed today (05/02/2005) at $46.10. Many oil stocks have had great runs in the last few years and CDIS is certainly no different. What's more, CDIS still looks like it has plenty of life in it yet -- especially if oil makes another run up in the coming months. Noticeable, also, is the fact that as oil goes down in price, CDIS does not seem to fall too much.
With 3 business divisions: Marine Contracting, Offshore Oil & Gas
Production, and Offshore Production Facilities, CDIS is somewhat unique
among this type of company as the integration of these discrete units
gives it some overall earnings stability in the cyclical energy
industry. In fact the business model is being copied by some of CDIS's
competitors. Cal Dive seems to be a well-managed company and has a
great safety record in an industry where working conditions can be
precarious.
Revenues have grown steadily in the last five years, from $181M in 2000 to $543.4M in 2004. Earnings have also grown well, apart from a blip in 2002 when earnings blips were de facto. Corporate goals for 2005 include revenue of $300-330M for Marine Contracting alone and total earnings per share of up to $2.70 versus $2.06 in 2004 (analysts estimates come in at $2.82 - average of 12 analysts.)
Watch for a Q1 International Earnings announcement on May 5th that will give some idea of how CDIS is doing towards the above targets.
Should oil oblige and go ballistic towards, or even past, the $100/barrel predicted by many analysts, then CDIS would be the best hedge for any long-term portfolio that does not contain any oil stocks. Even if oil goes nowhere, CDIS should continue to do well because exploration will continue as demand for oil continues to increase worldwide.
Looking at the chart, there is a nice steady long-term uptrend with a high of $52.26 in February. Since then, the chart has been forming a symmetrical triangle about $46. The expectation over the next few weeks could well be a breakout upwards into a new uptrend, but the price would need to break out above about $49 with accompanying volume for that to be confirmed.
Revenues have grown steadily in the last five years, from $181M in 2000 to $543.4M in 2004. Earnings have also grown well, apart from a blip in 2002 when earnings blips were de facto. Corporate goals for 2005 include revenue of $300-330M for Marine Contracting alone and total earnings per share of up to $2.70 versus $2.06 in 2004 (analysts estimates come in at $2.82 - average of 12 analysts.)
Watch for a Q1 International Earnings announcement on May 5th that will give some idea of how CDIS is doing towards the above targets.
Should oil oblige and go ballistic towards, or even past, the $100/barrel predicted by many analysts, then CDIS would be the best hedge for any long-term portfolio that does not contain any oil stocks. Even if oil goes nowhere, CDIS should continue to do well because exploration will continue as demand for oil continues to increase worldwide.
Looking at the chart, there is a nice steady long-term uptrend with a high of $52.26 in February. Since then, the chart has been forming a symmetrical triangle about $46. The expectation over the next few weeks could well be a breakout upwards into a new uptrend, but the price would need to break out above about $49 with accompanying volume for that to be confirmed.