Watch Lists

[dan_s]

I just spend several hours updating our Watch Lists. If you want proof that the market trades on preception vs reality just take a look at our Drillers Watch List. Most of the drillers are now trading at single digit PE ratios and ridiculously low multiples of cash flow per share.

The number of drilling rigs under contract today is higher than at this time last year, yet the whole group has sold off.
I do not see a big dropoff coming unless their is a significant drop in oil prices. Raymond James is the only firm that is forecasting a major drop in commodity prices next year (due to the increased oil coming from the shale plays).

Also, I think it is important to note that the drillers on our Watch List have survived much rougher times than what is being forecast, even by Raymond James. Plus, all drillers are not the same.
HP has a very high percentage of their fleet under long-term contract. HP is still looking at increasing EPS and CFPS and we can have a high level of confidence in these forecasts since so many HP rigs are under long-term contracts.:
Year EPS CFPS (from First Call)
2011 $3.90 $8.99 < Actual
2012 $4.84 $8.68 < Forecast
2013 $5.12 $9.27 < Forecast

Read This: http://seekingalpha.com/article/693971- ... urce=yahoo