Historically, that would be enough to re-evaluate the investment, but the stock did the re-valuation work on its own, recovering to the $27.08 entry point this month.
The significance? Those two, 50-day moving average breaks now look like an intermediate double-bottom, and that fact, combined with the bullish oil sector, keeps the growth story intact for HOS. Hence, I'm Reiterating my Buy rating.
To be sure, HOS will likely encounter psychological resistance at $30, but so long as the company's long-term revenue outlook remains constructive, $30 should not represent that much resistance, assuming the price of oil remains above $40. Given oil's current status in the global economy, that's a high-probability calculation.
The First Call FY2009/FY2010 EPS estimates for HOS are $2.76 to $3.13.
Stock Analysis: Hornbeck Offshore is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% 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 75% of your HOS position before December 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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