Date updated:04-21-2007
From Barron's 4/23/07
"With most U.S Stock market indexes near record highs, bargain-hunting investors ought to take a close look at any industry group with a rock-bottom price/earnings ratio. That means the offshore drillers, including Transocean, Diamond Offshore Drilling and GlobalSantaFe, which lease rigs to energy companies searching for oil and gas beneath the world's oceans. These and similar stocks trade for 7-to-11 times estimated 2007 earnings, and 6-to-7 times 2008 projections, among the lowest P/Es anywhere. Bulls argue the stocks look attractive because the current boom may last into the next decade. High oil and gas prices have spurred demand for offshore rigs as major energy companies bet that some of the world's biggest remaining petroleum deposits lie beneath the sea."

-
DO
Diamond Offshore - $90.00
- +1.99%
- $89.34
"Diamond Offshore has broken with the pack and began paying sizable annual dividends in January 2006. The company, half-owned by Loews (LTR), the New York conglomerate run by the Tisch family, paid a $4-a-share special dividend in January 2007, equal to about 80% of 2006 profits. It also pays 12.5 cents per share quarterly. Diamond isn't committing to paying out a fixed percentage of annual profits in dividends, but judging from the past two years, the payout ratio is likely to remain high. Diamond could earn a total of $35 a share in the next three years, based on current consensus estimates. With an 85% payout ratio, it could dole out $30 a share in dividends, or 35% of its current share price."

-
GSF
Gsf - $0.00
- N/A
- $N/A
"Investors also could benefit from takeover activity or leveraged buyouts in the sector. Seadrill (SDRLF.PK), a fast-growing Norwegian driller with the highest P/E ratio in the group, is believed to be weighing acquisitions. In a recent note, Citigroup analyst Geoff Kieburtz identified GlobalSantaFe and Noble as the most likely targets for Seadrill."

-
NE
Noble Corp (new) - $40.37
- +3.67%
- $40.27
"Investors also could benefit from takeover activity or leveraged buyouts in the sector. Seadrill (SDRLF.PK), a fast-growing Norwegian driller with the highest P/E ratio in the group, is believed to be weighing acquisitions. In a recent note, Citigroup analyst Geoff Kieburtz identified GlobalSantaFe and Noble as the most likely targets for Seadrill."

-
ESV
Ensco Intl Plc - $39.55
- +3.08%
- $39.07
No Analysis added

-
RIG
Transocean Ltd - $84.77
- +1.64%
- $84.75
No Analysis added
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