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HistoricalPEGuy (65.56)

In Comes the Tidewater



February 19, 2008 – Comments (2) | RELATED TICKERS: TDW

It feels good not to panic.  It really does.  There are great opportunities out there, you just need to look hard.  No free rides though, you gotta do your research and there maybe some pain while you wait for the market to recover.  Those waiting until the pain is gone - I wish you luck.  Timing the market is like trying to catch a fly with chopsticks.  You might think you can "wax on" and "wax off" as good as Ralph Macchio, but chances are you'll miss great buying opportunities.

Case in point, Tidwater.  Wow.  What a complete beat-down.  Its really shocking what the market has done to this stock.  Why?  Because earnings are somewhat flat in recent quarters.  When the market sees that from a high growth industry - BAM!  Sell, sell, sell.  Down from the upper 70s to lower 50s, Tidewater has become, simply, a no-brainer stock.

Reason #1:  Oil, oil, oil.  These guys service the drillers.  Their vessals help move, supply and contract for the big drillers such as RIG, NE and DO. 

Reason #2:  The international drilling market has ballooned and Tidwater is right there to reap the benefits.  Their services are vital to this industry and they will be able to drive premium pricing for time to come.

Reason #3:  Re-investment.  TDW is set to bring 40 some-odd ships on-line just to meet demand.  Its my opinion that all of those ships will be very profitable.  Simple growth through capacity increase.  Lovely.  However, we must be mindful of the timeframe.  I don't want to own this stock in 2015 when they've got a ton of vessels with nowhere to go.  In my opinion, TDW is playing the short term "reap the benefits while you can" game.  It'll work, but we need to have a sell point in mind (how about when it gets back to the upper 70s? or beyond...).

Reason #4:  1.1% dividend for your troubles.

Reason #5:  You guessed it, extremely low historical P/E ratio.

These guys will grow and drive earnings going forward.  Its just that simple.  The market has them priced as if a downturn has begun and its time to sell.  At this price, the market has made a mistake.

TDW is a buy.  Another no-brainer.  I hate to admit it, but I love downturns that punish solid stocks.

I don't own TDW, but that probably won't last very long.

-- HPEGuy

2 Comments – Post Your Own

#1) On February 19, 2008 at 12:34 PM, Capsperson wrote:

Agreed.  I've liked this for several weeks.  I've called them "the taxi service to the oil and gas rigs."

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#2) On February 20, 2008 at 10:23 PM, ctojeira (41.91) wrote:

Wax on, wax off, huh?


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