Readers of this space know that one of the preferred sectors is oil/oil services, and with the aforementioned in mind, Hornbeck Offshore (NYSE: HOS).
In general, analysts expect short-term doldrums for offshore oil servicer Hornbeck, primarily due to a decrease in demand for crude oil in North America.
However, heading into F2010 HOS should benefit from increased deepwater drilling in the Gulf of Mexico, particularly as oil's price firms later in 2009, as the U.S. economic recovery takes hold.
Analysts also like the fact that Hornbeck will add 11 new offshore supply vessels (OSVs) to its fleet by the end of F2010, and that should further boost earnings. OSVs dayrates should remain firm in F2009. The First Call F2009/F2010 EPS estimates for HOS are $3.53/$3.93.
The risks include (obviously) a failure of the U.S./global economies to start to recover as forecast in the second half of 2009, which would hurt oil prices.
Still, with a p/e of about 6, Hornbeck's shares are now as about as cheap as an empty shoe box. And as the legendary founder and owner of the New York Giants, the late Tim Mara, once said, "Even an empty shoe box is worth $500."
Stock Analysis: Hornbeck Offshore is moderate-risk stock. Consider buying a 25% position in HOS now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your HOS position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $12.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
7-03-2009 @ 11:36PM
Mike Longst said...
Hornbeck will make it through 2009, 2010 may be a disaster. Competition is crushing marketshare and turnover is out of control.