Diamond Offshore Drilling's (NYSE: DO) shares are poised to break-out to the upside, hence I'm reiterating my Buy rating on DO, first recommended on June 10, 2009, at a price of $91.63.

Diamond Offshore is considered to be better-positioned than other offshore oil/natural gas drillers for 2009-2010, due to a strong backlog of existing contracts, and a significant cash position. Some of that cash could be used to buy newbuild rigs and/or weaker offshore drilling contractors. DO services customers in about 50 countries; a major customer is Petroleo Brasileiro (NYSE: PBR).

Most investors know that it's an energy-intensive world, and even though the U.S. and global recessions have led to real declines in aggregate energy usage, don't look for that trend to continue. Further, the Obama administration's admirable goal to create a more self-reliant, energy-independent nation and the impact of efforts to first limit, then eliminate global warming from fossil fuels opens the door to alternative energy source development.

But, as Saudi Arabia reminds us, and the world, barring a breakthrough technology, fossil fuels will remain a major energy source for at least the next thirty to fifty years. In other words, the reign of oil has merely paused, not ended, which is why it's prudent to review Diamond Offshore (NYSE: DO).

Analyst upgrades:

• Jefferies upgraded Aruba Networks (NASDAQ: ARUN) to Buy from Hold following the company's Q3 results to reflect improved visibility. The firm raised its target price to $6.50 from $3.
• Citigroup upgraded Mosaic (NYSE: MOS) and Potash (NYSE: POT) to Buy from Hold and Agrium (NYSE: AGU) to Hold from Sell as it believes stronger grain fundamentals more than offset China contract risk. The firm raised its target on Mosaic to $72 from $48, on Potash to $145 from $83 and on Agrium to $55 from $36.
• Fulton Financial (NASDAQ: FULT) Was upgraded to Market Perform from Underperform at Keefe Bruyette.
• Rio Tinto (NYSE: RTP) was raised to Neutral from Sell at Goldman.
• Noble Corp. (NYSE: NE) was upgraded at Deutsche Bank to Buy from Hold.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Apollo Group Inc. (NASDAQ: APOL) reported that Q4 revenue soared despite the recession.
• Baidu Inc. (NASDAQ: BIDU) posted strong annual revenue, but at a slowing growth rate.
• Career Education Corp. (NASDAQ: CECO) easily topped Q4 earnings expectations, lifting shares up.
• Comcast Corp. (NASDAQ: CMCSA) Q4 earnings beat expectations and it increased its dividend.
• CVS Caremark Corp. (NYSE: CVS) shares jumped after it reported higher earnings in Q4.
• Digital River Inc. (NASDAQ: DRIV) shares soared on better-than-expected Q4 earnings and revenue.
• Expedia Inc. (NASDAQ: EXPE) reported dismal results due to a huge good will write down.
• Goodyear Tire & Rubber Co. (NYSE: GT) posted a greater-than-expected Q4 net loss and announced job cuts.
• Hormel Foods Corp. (NYSE: HRL) exceeded Q1 earnings expectations due to the popularity of SPAM.

"Loews (NYSE: L), the holding company of the New York-based Tisch family, is a way of buying a collection of good stocks at a discount, with much else thrown in free," says Adrian Day.

The editor of the top-notch The Global Analyst explains, "These value investors have a long record of buying quality assets cheaply when they are out of favor, nurturing them, and eventually monetizing them."

"Everyone loves a sale, right? Typically, the Tisch family buys major chunks of out-of-favor businesses, often publicly traded, and holds them for many years. They exemplify the important traits of successful value investors: discipline and patience.

"I calculate a New Asset Value for Loews-taking current (depressed) stock prices for its publicly traded holdings, the cash, and conservative valuations for the private assets-of almost $39 per share.

Despite the oil market's recent correction / minor pullback, oil remains at an elevated price, and the outlook for the oil and oil services sector remains solid.

And one oil service company worth an evaluation is Diamond Offshore (NYSE: DO).

Diamond is a contract driller of offshore oil and gas wells, with a concentration in deepwater drilling. The company has a strong fleet of floater rigs: dayrates for these rigs will continue to increase at double-digit rates, a market condition that reflects their increased value stemming from higher energy prices, and some pricing power for DO.

Further, Diamond has an impressive geographical footprint (rigs operating in the Gulf of Mexico, North Sea, South America, Africa, Australia, and Southeast Asia) and superior client diversification (51 customers). The Reuters F2007/F2008 EPS consensus estimates for DO are $6.75/$11.89.

"The asset boom continues," say Mary Anne and Pamela Aden in The Aden Forecast. "All of the pieces have fallen into place. Following the Fed's move to lower interest rates, a recession is now less likely than it was a month ago, while inflation is now more likely.

"There is really every reason why oil should stay strong. Tensions in the Middle East with the threat of possible supply disruptions alone will keep pressure on the oil price. Then we still have the chance for hurricanes threatening the Gulf of Mexico's platforms, refineries, and pipelines.

"The reason this is so sensitive is because the world is dependent on oil and this demand is growing by leaps. As our good friend Doug Casey notes, The International Energy Agency reported that they see an oil supply crunch within five years that will force up prices to record levels and increase the West's dependence on the OPEC cartel.

"This is a very real possibility and in spite of temporary dips as we saw with the credit crunch, high oil is here to stay. Our first technical target has been $90, with a further move to $100 after that.

For new energy positions, the Aden sisters recommend Schlumberger Ltd. (NYSE: SLB), Diamond Offshore Drilling Inc. (NYSE: DO), and Transocean Inc. (NYSE: RIG). For investors who want a diversified portfolio of energy holdings, they recommend the Energy Select SPDR (AMEX: XLE) and the iShares S&P Global Energy Fund (NYSE: IXC).

Each day, Steven Halpern's TheStockAdvisors.com features the latest investment commentary and favorite stocks of the nation's leading financial newsletter advisors.

Leo Fasciocco is a technical specialist who focuses on finding breakout buys -- stocks that have broken out from their trading bases and are poised, in his view, to move higher.

In his Ticker Tape Digest he has isolated two intriguing energy plays: Diamond Offshore Drilling Inc. (NYSE: DO) searches for energy below the sea, while solar firm Suntech Power Holdings Co. (NYSE: STP) looks skyward.

The advisor explains, "Diamond Offshore has 30 semisubmersibles, 13 jack-up rigs (mobile drilling platforms), and one drillship. They operate around the world. The company contracts with major oil and gas companies.

"DO's profit outlook is excellent and should be the driver to send the stock higher. Technically, the stock's long-term chart shows a powerful bull market. It has soared from 20 to 113 the past three years, riding the rising price of crude oil.

MOST NOTEWORTHY: Nasdaq Stock Market, Family Dollar, Circuit City, Wells Fargo and Key Corp were today's noteworthy downgrades:

• Credit Suisse downgraded Nasdaq Stock Market Inc (NASDAQ: NDAQ) to Market Perform from Outperform on valuation.
  
• JP Morgan expects Family Dollar Stores Inc (NYSE: FDO) to face macro pressures and increased competition from Wal-Mart Stores Inc (NYSE: WMT) and Dollar General.
  
• Bear downgraded shares of Circuit City Stores Inc (NYSE: CC) to Peer Perform from Outperform based on lack of visibility, execution issues, softer consumer environment, potential pricing disruptions, and product cycle concerns.
  
• Merrill downgraded shares of Wells Fargo and Company (NYSE: WFC) to Neutral from Buy to reflect higher credit losses and valuation and KeyCorp (NYSE: KEY) to Sell from Neutral to reflect the company's "weak" revenue growth.

OTHER DOWNGRADES:

• B. Riley downgraded shares of Iris International Inc (NASDAQ: IRIS) to Neutral from Buy.
  
• Soleil downgraded ExpressJet Holdings Inc (NYSE: XJT) to sell from Hold.
  
• Calyon downgraded Weatherford International (NYSE: WFT), Transocean Inc (NYSE: RIG) and Diamond Offshore Drilling Inc (NYSE: DO) to Add from Buy.

MOST NOTEWORTHY: Progress Energy Inc (PGN), Mattel inc (MAT), Career Education Corp and (CECO) were some of today's notable upgrades:

• JP Morgan upgraded shares of Progress Energy Inc (NYSE: PGN) to Neutral from Underweight citing the company's improving earnings profile.

• Lehman upgraded shares of Mattel Inc (NYSE: MAT) to Equal Weight from Underweight with a $26 target, citing increased traction at retail stores for Barbie as well as expectations for 10% earnings growth.

• Career Education Corp (NASDAQ: CECO) was upgraded to Neutral from Underperform at Credit Suisse as they believe general start growth will bottom in 4Q/1Q and that its University division will return to positive start growth in 3Q07.

OTHER UPGRADES:

• Pacific Growth upgraded shares of Marvell Technology Group ltd (NASDAQ: MRVL) to Buy from Neutral to reflect the aggressive transfer of the Intel (NASDAQ: INTC) cell phone foundry business.

• Both Soleil Securities and Bank of America upgraded Warner Music Group Corp (NYSE: WMG) to Buy from Hold with a $23 target in order to reflect the company's improved fundamentals; they believe Warner's balance sheet restructuring bodes well for earnings.

• Merrill Lynch upgraded JetBlue Airways Corp (NASDAQ: JBLU) to Buy from Neutral on valuation.

• Diamond Offshore Drilling Inc (NYSE: DO) was added to Goldman Sachs' Conviction Buy List.

• CIBC upgraded Wells Fargo & Co (NYSE: WFC) to Sector Outperformer from Sector Performer, citing valuation and the $8 billion in excess capital in the coffers.

• Wachovia upgraded Fossil, Inc (NASDAQ: FOSL) to Outperform from Market Perform.

• HSBC upgraded Sony Corp (NYSE: SNE) to Neutral from Underweight.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Western Union (WU) and Office Max (OMX) top today's modest list of initiations.

• Western Union was initiated with a Buy at Soleil Securities. The firm believes Western Union is well positioned to take advantage of the projected growth in the world's immigrant population.
• Office Max was initiated by Piper Jaffray with an Outperform rating and $50 target. The firm still believes there is upside to Office Max's turnaround story led by their management team.

OTHER INITIATIONS:

• Diamond Offshore (DO) was initiated with a Buy rating and $107 target at Calyon Securities citing valuation and industry fundamentals for the rating.
• UBS assumed coverage of Alltel (AT) with a Neutral citing a weak wholesale/roaming revenue outlook. Alltel was also initiated by Pacific Crest with a Market Perform Alltel, citing modest growth prospects.
• And finally, Electronics for Imaging (EFII) was initiated with a Neutral at the Banc of America. The firm believes Q4 estimates will need to come down based on the impact of further delays at Canon (CAJ) on the 70 page per minute printer, pushing a lunch to March 2007.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).