Dividend.com: DryShips Could Suffer
09/02/08 - 12:55 PM EDT
Tom Reese and Paul Rubillo
DryShips Could Suffer From Commodity Price Drop
DryShips(DRYS Quote - Cramer on DRYS - Stock Picks) will be a name in focus Tuesday, as commodity prices are dropping. The dry bulk shipper has seen its stock drop 35% in the last three months. The stock's price action seems to be dictating that even lower prices may be in the cards, so we are taking a closer look to draw out the potential scenario for investors that have a short-term focus. The stock will need to hold the Aug. 5 low of $66.30, as the next area of any support looks to be in the $52 to $55 area. If the stock can hold above $66.30, then it needs to get back over $82 for a potential move higher. When recent highfliers such as DryShips experience these big pullbacks, opportunities may arise. Remember, these "hot money" stocks are better suited for investors with shorter-term timelines. Until the stock can sustain above certain key levels, we think the long-term picture will remain unclear. Altria May Have Catalyst in Interest Rate Cuts Solid stocks with strong dividend yields, like cigarette maker Altria Group (MO Quote - Cramer on MO - Stock Picks) could stand to benefit from potential global interest rate cuts. Markets around the world may be starting to shift away from inflation concerns, instead focusing on rate cuts that may be in the offing. Interest rate cuts will mean lower returns in many of the guaranteed fund accounts, including certificates of deposit, and money market savings accounts. When global inflation concerns dissipate, investors often look for dividend-paying stocks that can beat the anemic CD and money market rates.
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