Transocean, Inc. (NYSE:RIG)

This is a bet that RIG establishes an MLP, much like Seadrill did when Transocean's new CFO was there. Such a move should serve as a catalyst for the stock.

Deej

Looks expensive.

Deepwater drilling is their specialty and where their industry leading expertise lies. See a lot of the big players move here for giant contracts with these crazy high day rates over the next couple of years.

As long as downtime doesn't hit them hard and their marketing can keep fleet utilization up - they are set to really outperform. Also, who knows what Carl is going to push for

rig

Has been lull in shipping. Carl Icahn is now looking to increase his holdings after making purchase of 1.56% stake in offshore contractor.

it appears that the huddles that were hold RIG back have been resolved

Oil and especially Gas are going to be a great place to be in the coming years. Bakken, Eagle Ford, and other oil and gas formations in the U.S. are going to be massive with today's technology.

Oil and Gas will lead the coming American comeback, and they will outperform the large correction that will precede the Great American Revival.

RIG will be a long term a good investiment.

Large, old fleet is expensive to operate. Capex program just starting to take advantage of historically cheap money--too little, too late. That coupled with no dividend to provide a floor will lead to underperformance.

energy

The world still runs on oil

Ultra deepwater play with macondo baggage already baked in.

biggest deepwater driller. We will always need oil.

Long term buy and hold, we will need oil and this stock is down due to litigation. If able to stay out of the courtroom there is no where to go but up.

Offshore drilling will survive and thrive once the BP disaster is a bit further in the rear view mirror.

RIG has experienced serious devaluation over recent year, primarily due to operational and legal issues. Negative earnings yet still FCF positive and has had CFFO > N/I for 9 out of 11 past yrs, > yrs were 06 and 07. Stock has experienced recently high price appreciation, which is one of my main reasons for paying more attention to it and considering investing. Cash levels relative to debt not strong. FCF growth strong especially for oil firms, reverse DCF gives promising avergae, but NOT median. Regular DCF valuation gives middle price point of 62, minimum price point of 25 and max price point of $143, which at price of 53.76 implies -57% downside to lowest range, and 147% highest point upside. Acknowledge risky value play that may be value trap and recently strong price action has played significant role in sparking research and entering position, TTM figures not impressive relative to 5 yr and 10 yr averages across FINA ratios, figures, etc. Assuming pessimism is excessive and ignoring having largest fleet in industry and profitability of industry, however admit business has not been strong and may continue to falter. Debt levels may hinder firm going forward, especially if profits drop further to operational issues, external factors such as price of oil, or other tail-risk. Appears liabilities of Macondo spill have been capped at 1B, but further litigation may result in more cost. Entering at price of $50 with 25% TS for 30 shares initially, potentially buying more in thirds.

Risks
-debt level further weighing down firm and not being able to operate at peak performance
-seems less so default risk due to low debt / equity risk and liquidity decent due to 1.6 current ratio, but nonetheless not ideal
-future results of Macondo spill
-future oil prices
-offshore drilling becomes less favored than onshore
-Brazilian operations are impeded
-other risks yet to be determined

It's the biggest player in a very profitable business and is very undervalued due to temporary legal and maintenance troubles. Once these issues subside and they get their act together their stock price will be back around 80 or so.

must have oil, people complain about oil and then drive their cars and run their air conditioners and ... you get the idea