Dawson Geophysical Company (DWSN)

Industry (192 industry groups) – Buy strong stocks on pullbacks in strong industries

DWSN is part of the Petroleum Field Services industry group. This industry group has been in the top 10 rankings for 10 of the past 52 weeks ranking it tied for 14th most powerful industry group. Interestingly, Field Services has put two recent back to back top 10 showings, but prior to that it hasn’t been in the top 10 since the week ending June 29th, 2007. Currently, the industry group is ranked 12th. Industry groups are cyclical and strong industry groups can remain strong for a very long time

DWSN is in the bottom 1/3rd as far as market cap is concerned. The top 3 market caps in this space are SLB (Schlumberger), HAL (Haliburton) and MDR (McDermott). I would buy all 3 of these companies on a pullback especially MDR.

Fools – Top 100 fools outperform the rest of the pack

Top 100 fools green/red thumb this stock by a ratio of 26 to 1 to 1. Oh yes, one fool meant to green thumb and instead red thumbed… What a fool. The number of top 100 green thumbs is second only to ACH, my pick on April 18, 2008. Whenever you see this many top fools in a stock you think, am I too late? In the last 90 days top 100 fools have green/red thumbed the stock 8 to 1. Thus, top 100 fools are still piling in this beauty.

Technical – In a bear market buy the best companies most oversold, in a bull market buy strong stocks on pullbacks

DWSN is 15% off its 52 week high which is a little light for a pullback entry point in a bear market. My sweet spot is 25% to 35% in a bear market. However, this stock is loved by many and the industry is starting to heat up again. The stock has major support around $52 a share and we are well above that. It has minor support around $65 a share just under its 50 day moving average. Unfortunately, I do a pick of a day every day even in a big bear rally and DWSN is my top stock on the radar. I just can’t get myself to put real money at these levels with only a 15% discount. Just remember, we don’t time the market and this is a one year hold. This is the best stock on my radar today if your buying.

Fundamentals

Pass Line (place a bet on this stock if this pumps you up)
Quarterly YOY Sales growth estimate = 57% and Earnings growth estimate = 27%. Earnings growth estimates have not been this high since July 2005, very bullish
They are a leading provider of onshore seismic data acquisition services. Their clients range from major oil and gas companies to independent oil and gas operators, as well as providers of multi-client data libraries. The clients rely on seismic data to identify areas where subsurface conditions are favorable for the accumulation of hydrocarbons and to optimize the development and production of hydrocarbon reservoirs.
No long term debt
Three consecutive years of increasing positive operating cashflow

Don’t Pass Line (don’t place a bet on this stock if this bothers you)
March 19th an analyst came out with a hold and said the shares are properly valued. The stock has now dropped to her target price
15% short interest. Where there are shorts there are problems
They do business in North America only
49% of revenue comes from one client
Missed earnings last quarter