MONSTER PORTFOLIO 2011
Balance: Inception 01/07/11
$1977.32 Stock
$13.65 Cash
Total $1990.97
Balance: End of Week 41 10/28/11
$1,506.05 Stock
$1,059.87 Cash
Total $2,565.92
Since Inception:
-1.53%
Back out cash inflow and we have a balance of $1,960.42.
Welcome back everyone!
So I was able
to dig into
Weatherford’s (WFT) 3
rd qtr. earnings transcript last week
and I’m here to say that WFT appears to be doing all of the right things. (All
of the right things that are within their control.)
The positives outweigh the negatives.
First I will cover the negatives to get them
out of the way.
These are the issues
that negatively impacted their earnings.
Negatives
1.
An increase in the effective tax rate reduced the
earnings by $0.01
2.
Foreign exchange book losses accounted for a $0.03 hit
against earnings
3.
Middle East, North Africa, and Asia Pacific revenue
declined $45 million due to increased start up costs in Saudi Arabia, Kuwait
and Iraq, contracts in Algeria lapsed and WFT was forced to demobilize and relocate
outside of the country, and lastly higher incurred costs in Iraq due to shut down
costs, idling costs, and problems with recent started operations
4.
Net debt increased roughly $301 million for a grand total
of $7.3 billion in debt
Positives
1.
Quarterly revenue reached a record high of $3.4 billion
2.
Year on year revenue growth of 33%
3.
Sequential quarterly growth of 11% (Always a positive to
see revs higher on back to back quarters.)
4.
Continued positive outlook for North America
(Conservatively)
5.
Positive outlook for Canada which has lagged for years
6.
Increasing margins and volume in certain product lines
including artificial lift, production optimization, formation evaluation, and
open hole completion for North America in 2012
7.
Positive outlook in Latin America, Russian, and
European operations
8.
Increased activity in North Africa (Libya and Algeria)
9.
Margin improvements internationally for the 4th qtr. and
strengthening into 2012
10. 15-20%
of North America earnings is from fracking, which means more room for growth
In conclusion of the earnings I still continue to believe that WFT is a
viable investment.
There is much room
for improvement!
That being said I
believe Weatherford is on the right track to increase revenue and improve their
operations.
The one thing that is a
slight concern is the increased debt, but as a company grows to increase market
share in a competitive industry taking on debt to grow is quite normal.
If the debt to equity continues to increase
passed Q3 of 2012 I may change my tune.
So my recommendation is to continue to buy WFT on the dips well into
2012 as the strength in earnings will continue with elevated crude prices.
I would also like to disclose that I sold a large stake in WFT on Thursday
and Friday as selling into strength is what I do.
This was mostly because I had to much
invested in WFT and I had to reduce my risk.
Since October 4
th Weatherford has increased in value by
35.97% as of Friday’s close.
A run like
that deserves a little profit taking.
You have to lock in your profits while the gettin is good!
Remember I try to think like the big fund
managers. And currently they are selling as we saw some profit taking
today.
My objective is to make as much
money as I can while reducing my risk along the way!
Westport Innovations (WPRT) reports tomorrow.
Depending on the outlook I may try to sneak
back into the speculative alternative energy play for the remainder of the
year.
I still have a goal to finish up
10% on the year and I have to pick my stocks wisely as I’m running out of time.
LOL!
All research was derived from Weatherford’s website and can be viewed by
clicking on
WFT (hyperlinked)
Have a great night!
Clay-
“When in doubt buy more!”
Current Holdings:
Apple (AAPL)
Cosi Inc. (COSI)
Weatherford International (WFT)
