A High-Yielding Energy Position to Take Now

Genia Turanova
Friday, April 12, 2013

A growth and income play we like right now is Diamond Offshore Drilling (DO) Why? The company has compelling yield, an improving growth profile, and its industry is experiencing a recovery.

Diamond Offshore owns and operates one of the world’s largest fleets of offshore drilling units; including 32 semisubmersibles, 13 jack-ups, and four dynamically positioned drillships, three of them with expected deliveries between 2013 and 2014. Its equipment lets the company offer equally diverse worldwide services in both the floater (ultra-deepwater, deepwater and mid-water) market and the non-floater, or jack-up, markets. Often criticized for its older fleet, Diamond Offshore in fact had been for years investing in its fleet, having devoted nearly $4.2 billion to it in new capital since 2009. Since then, the total number of rigs has declined, as the company divested 8 jackups and 2 midwater rigs, but the focus on ultra-deepwater and deepwater markets has resulted in Diamond having more than doubled its fleet there, from 8 to a total of 19.

The BOJ’s New Shogun Unveils a New Weapon

Dr. Stephen Leeb
Wednesday, April 10, 2013

Determined to break the cycle of deflation that has gripped his country for much of the last 20 plus years, last week the Bank of Japan’s newly installed governor, Haruhiko Kuroda, unveiled shiny new weapons to devalue the yen, in hopes the country will be able to export its way out of trouble and drive consumer inflation to 2 percent. Those open-ended measures call for the BOJ to double its monthly bond purchases to 7.5 trillion yen (roughly $80 billion).

To put Japan’s ultra-aggressive quantitative easing into perspective, consider that adjusting for the size of the Japanese economy, it would be akin to the United States Federal Reserve buying more than $265 billion in bonds every month (or nearly $3.2 trillion per year), rather than the still staggering $85 billion in bonds the Fed already buys monthly.

The Unique Opportunities that Cyclicals Provide Right Now

Scott Chan
Monday, April 8, 2013

One of the older admonitions on Wall Street is to never confuse brains with a bull market. We haven’t heard it in a while, but considering how the markets have performed recently, it’s worth remembering that during big bull runs like the one we’ve experienced since the middle of last year (or the end of the financial crisis, depending on how you measure it), equities of all stripes and sectors have risen. Thus the saying – in strong markets, anyone can pick stocks, since they’re all going up in some fashion or another anyway.

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