It goes without saying that I favor oil/oil services plays, including drillers. And it likewise goes without saying that I'm not surprised by contract driller Atwood Oceanics recently climb.
In general, look for Atwood to combine a solid $1.2 billion revenue backlog, with the potential for dayrate gains, in selected rig classes. A sooner-than-expected recovery in global oil demand will only add to ATW's upside. Hence, if you didn't scoop-up some shares of ATW in April, it's now or never. The First Call FY2009/FY2010 EPS estimates for ATW are $3.75 to $4.01.
Stock Analysis: Atwood Oceanics is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in ATW 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 75% of your ATW position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $8.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.