Transocean (NYSE:RIG) is up 34% this year. The world's largest offshore oil and gas driller was a top buy for the fund in its latest disclosure period. The stock has had three quarters of triple-digit earnings growth. EPS growth has accelerated for four quarters.
Its Q2 earnings rose 338%, beating analyst estimates by 7%. Use of its drilling rigs is up, as are its rates.
But the stock slipped 23% from its late July high to a mid-August low. The downturn came at around the time Transocean said it would take over GlobalSantaFe (NYSE:GSF). Leverage to help finance the takeover will boost the firm's debt at a time when credit is growing scarcer and costlier.
The company's cautious outlook for shallow-water rigs seemed to further spook investors.
But the stock has rallied about 11% from its recent low and sits 10% off its old high. It shot above its 10-week moving average Tuesday as volume ticked up to just below average.
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Tuesday, September 4, 2007
Transocean Blurb @ IBD
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