Diamond Offshore Drilling, Inc. (NYSE:DO)

Another Winner like ESV and SDRL. Trans.. who, again?

An extensive analysis and valuation of DO's entire business -- doable in 6 days' worth of work -- reveals very good things about the company. I have discovered a great credit record, its favorable history of operational efficiency (complete with translation to good turnover ratios and significant improvements in its cash conversion cycle), decent profitability (that's consistently better than the top three in the industry), sufficient competitive advantages to compete with the big boys and keep out the small-time riffraff, and a market outlook that'll get you high on its long-term prospects.

Current price of $65 is embedded with an 18% mark-up for its future growth and DO's got the potential to hit $100 in the long run. Even though macro jitters don't normally touch the DO's enterprise, they do have a strong impact on its stock price (there's a reason its beta is close to 1.0), bulls like me should start pulling out the big trades on the latter part of thee year or, at the latest, mid-2013. DO's fleet of 49 rigs only got 16 DW/UDW floaters (34%) and a quarter of that won't roll out 'til Q3 or Q4 next year. Don't expect revenues to start going up until then! You might even see it going down -- jackups are weakening and mid-depth (5000 ft. and below) opportunities aren't as abundant as deep (5000 to 10000) or ultra-deep (10000 up).

The only reason you'd buy right now is to exploit the minimum 5% dividend yield they've been giving since '06. (Or was it '07?)

Planting the spring crops, time to start buying in.

New GOM leases sold by US Govt recently - drilling there to resume soon. DO has strong support between 50-60. I'm positioning for next drilling upcycle.

The new ultra Deep water Drilling ships will allow this company to become competitive in the new ultra deep water market in Brazil and the US

Mucho underpriced

Current Wall Street estimates are simply too pessimistic, DO earnings power can reach $12 per share in 2013 with the addition of the 3 newbuild 12,000 ultradeepwater drillships and two other newly built drillers that started working in 2010 bought at distressed prices in 2009. That means DO added 5 of the highest end drillips since 2009. DO earned close to $9.80 per share in 2009 even if it achieved that number which is very likely stock is currently trading at 6.9x P/E which is half the historical multiple on the stock. 2010 was the year of the Macondo disaster which led to DO moving rigs outside of GOM and incurring a lot of costs along the way which depressed margins and earnings.

Cheap and growing industry. Haven´t bounced yet back to pre-gulf disaster pricing.

Oil, is there any other reason?

Drill baby drill... This one does it good.

I still believe it has room to grow after reading several reports of new rig development and gaining contracts in the gulf. Several have increased the stock price into the $80-$90 range. It will take a few years but I'm looking for this stock to make it back on top again.

we need oil, oil is far from surface and DO drills it

I think oil and gas still has room to rise for a few months or more. This pick looks good because it has a stockscouter rating of 9 and CAPS 5.

A ridiculously cheap stock trading at ~11 times earnings. I suspect PEG ratio for to be <1.0 vs some of the figures posted out there. Future comps will have a low hurdle to jump based on the revenue and earnings hit DO took for their Gulf rigs in 2010 as a result of the BP fiasco. DO has also made investments in new rigs, which could be a catalyst for future growth.

An added bonus is the shareholder-friendly management that consistently issues special dividends, which puts current yields at just under 5%. So if the growth doesn't materialize as quickly as I suspect, I am at least getting paid nicely while I wait.

Drilling for oil will start very soon.

Here's the buy rec:
http://www.fool.com/investing/general/2011/01/19/rising-star-buy-a-basket-of-energy-stocks.aspx?source=ihpsitota0000001&lidx=4

Oil is on the rise and Diamond will be there to bring it out of the ground. Alternative sources of energy are never gonna totally replace oil as a energy source.

This thing shouldn't be so depressed. Will come back strong in 2011!

DO has tremendous 3 year revenue growth in the South American and Asian sectors. With Petrobras' 225 billion 5 year budget and Asia's fuel needs there will be increasing demand and high rig utilization. Additionally, a minor fluctuation in the P/E 10x to 12x could send the stock to 84 with no earnings surprises. The P/E has fluctuated much high and some of its peers trade at a much higher ratio. Finally, the large short interest will increase volume when people start covering at the first sign diamond returns to its rediculously high div. payout and will add rapid increases in the share price.I would bet the stock hits $85 by march and trades in a range between that and $93 until the later part of June.