Cabot Newsletter 10/24/07
Hold - CAMERON (CAM 102 NYSE)
Recommendation 5/1/07 at 64
Cameron took a hit last week along with all oil stocks � we write more about the group on page 5. Chart-wise, there�s nothing wrong with CAM, as the RP line remains in a firm uptrend, and some sort of pullback was due. But we�re concerned about the ferocious selling that occurred in the group late last week, after a protracted advance. The result: We�ll change our rating to hold, and see how the market likes (or dislikes) the firm�s quarterly report, due out November 1.
WATCH THE OILS!
Oil stocks have been a strong leadership group in recent months; we�ve made good money in Cameron, and recently National Oilwell got off to a good start for us. But last Friday, oil service giant and sector bellwether Schlumberger (SLB) reported third-quarter earnings that were above expectations � yet the stock was crushed following cautious comments by management.
You can see how SLB broke below its 50-day moving average in the chart here; many other oil service stocks were badly damaged as well. Right now, it�s too soon to call an intermediate-term top in the group, but we know that when the big-cap leader goes down, the sector often follows. We�re pulling an aggressive move by selling our shares in National Oilwell , though we�re holding our shares in Cameron. The sector could resume its uptrend soon, but we believe taking a few chips off the oil bandwagon is a good idea.
shorts took it down to cover their shorts in 95 96 area from where last up leg started . now over 97. selling pressure giving way to buying pressure.
also had another read of 2nd q earnings report . ceo
then actually raised the 3rd q eps guidance so the 3rd q
should be o.k. with record order book i am expecting
NOV reported stellar earnings but got whacked on some statements about a tougher drilling environment in North America -- something about Canada forgetting that capitalism is a good thing (my interpretation, anyway). Also, get this, they "only" beat estimates by 8 cents a share. People frustrated because they weren't "surprised enough".
I'm wondering if the same could happen here: "CAM reported earnings greater than the rest of the S&P 500 combined but the stock fell because Wall Street analysts predicted that probably won't continue for the next 20 quarters in a row."