Keeping my focus on undervalued stocks with strong fundamentals, I will once again be focusing on a stock in the energy sector today. The resurgence in the price of oil has made the energy sector a great place to find value.
When the price of oil dropped in late 2006, the market drove many world-class energy companies, such as
, below their true value. With the cold finish to the winter and the upcoming summer driving season, stocks in the energy sector provide a great opportunity to cash in on deep-in-the-money calls.
Today's selection is
. Shares closed Monday's trading at $33.39. Rowan provides offshore drilling services in the Gulf of Mexico, the Middle East and the North Sea. In the past year, the company took great lengths to diversify its business away from just the Gulf of Mexico and obtained several long-term commitments abroad. In addition to its offshore drilling services, Rowan also produces equipment for the drilling, mining and timber industries.
At the current level, Rowan is trading 26% off of its 52-week high. What makes Rowan truly special is that the company is trading at only 1.91 times its book value. Rarely can an investor find a bargain so cheap. At its present price, Rowan's stock is trading minimally higher than the value of its assets. Not only does this provide great downside protection, it also provides a great incentive for investors to put their money into this stock. In addition, Rowan boasts a P/E ratio of 11.73 and a forward P/E of 6.35. These statistics indicate Rowan's value and growth.
In mid-March, the stock's price broke into technically positive terrain when it crossed over the 50-day moving average with much momentum. The 50-day had been moving downward beginning at the new year until mid-March, when it finally leveled off and turned positive. Rowan now stands above its 200-day simple moving average at $32.91, which will provide support, and the 50-day SMA represents the second support at $31.54.
Now, let's dig into the batter's box, so we can take advantage of the incredibly cheap value in Rowan's deep-in-the-money calls and place a limit order to buy 10 July $27.50 (RDCGY) deep-in-the-money calls at $6.50 or better. I have placed this order.
Game of Life
These days, it is only logical to consider a job on the basis of its benefits, specifically health insurance. Will my spouse receive health care? Will my kids? What kinds of treatments will be insured by my health care company? The list goes on. Health care is of utmost importance and often a determining factor in the pathways we choose in our lives.
But it's not just for people. Veterinary companies now offer health care for pets. If we are going to worry about health care for our children, then it is only practical that we consider our pets' health care just as seriously. After all, our pets also represent unconditional love.
Even my own dog finds a sweet spot in me sometimes when he lays his head on my lap with his welcoming eyes staring at mine and his tail wagging a mile a minute. I may regret him sometimes when he steals my steak off my plate, but in the end, there's no question he is family.
Unfortunately, the rising threat of contaminated pet food has pet owners worried for their furry companions. Tests have shown that the chemical melamine has appeared in the wheat gluten used in many pet products, across a multitude of brands. Consumption of the toxin can result in permanent kidney damage. The wheat gluten has been traced to a plant in China, and the FDA has taken steps to prohibit further gluten imports from that company.
The list available at the FDA's Web site shows the many brands that are now recalling their pet food. Most of the contamination occurred in wet food, meaning that there is some chewy or gravy aspect to the food. Only one dry product has proved to have contained the wheat gluten.
The recent scare has organic pet food companies booming and has pet owners scrounging for extra pennies to finance the new palate. A 16-ounce bag of dry organic pet food can cost up to $40, compared with generic brands for less than $20 a bag. Imagine spending $40 on a 16-ounce bag of pretzels. People will pay anything for man's best friend. So don't be surprised if you see a Whole "Pet" Foods open in your neighborhood!
Moreover, we have heard unbelievable stories about animals, like those of the tsunami in 2004, when the animals must have sensed the imminent disaster and escaped to safe ground. One man tells a story of being on a boat at sea when he saw a school of dolphins swimming hurriedly. He had the intuition to follow them and ended up escaping the earthquake at sea that took so many lives.
Days and months after the tsunami, researchers and rescuers were astounded to find very few animal casualties. In times like these, when we have no warning or means of preparing for such a disaster, we must resort to those who know more than we do: the animal world.
The Players Club provides resources to athletes that they cannot find elsewhere. We acknowledge that athletes do not know everything about their wealth, and rightfully so, which leads to the birth of a new breed of financial intelligence and security. The Players Club provides the guides to lead athletes to a safer financial future, in preparation and management for life's unexpected tragedies.
For the time being, cuddle up with your furry friends. While we may think we hold the leash, realize that often, they are the ones leading us.
Always remember: Life is a journey, enjoy the ride!
At the time of publication, Dykstra was long BTU.
Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.
Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.