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Best Stock Pick - MDR, McDermott - Wait For A Breakout Or Buy Now?
By Geoff Green | April 22, 2008
Best stock pick for this weeks analysis is symbol MDR - McDermott International. MDR has consistently been among our weekly best stock picks list and no wonder when you examine the stock price trend and the details of this fine company.
MDR is a member of the Petroleum Field Services sector and industry group - one of the stock markets strongest up-trending industries in recent weeks. Here is an overview of their business:
Business: McDermott Intl, (MDR) McDermott International, Inc., through its subsidiaries, operates as an energy services company worldwide. It operates in three segments: Offshore Oil and Gas Construction, Government Operations, and Power Generation Systems. The Offshore Oil and Gas Construction segment engages in the front-end design and detailed engineering, fabrication, and installation of offshore drilling and production facilities; and installation of marine pipelines and subsea production systems. It also provides project management and procurement services. The Government Operations segment supplies nuclear components and provides various services, including uranium processing, environmental site restoration services, and management and operating services for various U.S. Government-owned facilities, primarily within the nuclear weapons complex of the U.S. Department of Energy. The Power Generation Systems segment designs, engineers, manufactures, constructs, and services utility and industrial power generation systems, including boilers used to generate steam in electric power plants, pulp and paper making, chemical and process applications, and other industrial uses. It also supplies fossil fuel-fired steam generating systems, large replacement commercial nuclear steam generators and components, environmental equipment and components and related services. The company was founded in 1923 and is based in Houston, Texas.
MDR’s growth rate has been accelerating slightly over the last few years at 25% two years ago, 28% last year and 29% as of today, 4/22/08.
MDR’s earnings per share has accelerated from $1.08 in April of 2006 to 1.78 in April of 2007 to $3.11 today.
Let’s take a look at the weekly chart to see how these results have affected MDR’s stock price:
As you can see from MDR price movement since mid-year 2005, this stock has been in a constant uptrend. MDR build a 9 month base during most of 2006 and into 2007, and once MDR stock price broke out of that base to the upside it was off to the races again.
It appears that MDR may be once again building a base with the resistance level at just over $60.
Will this uptrending stock from our best stock picks list breakout and move upward from this consolidation?
Time will tell.
However, this points out the beauty of stock chart analysis prior to buying a stock. Although MDR has bounced off support at the 50 day moving average, there is no guarantee of a breakout.
A better stock purchase strategy is to buy from a bounce from a 50 day moving average or other support line so you at least have some built in profit should an upwards breakout not occur while we are in a bullish trending market.
If you don’t own this stock yet I suggest you wait for a breakout of resistance at the $60 level before buying.
Does anyone else have an opinion? If so please add your comments on this post.
As the author and owner of this article, you have my permission to publish these postings & articles electronically or on your own Web site, free of charge as long as the following by-line and functional Internet link is included in its entirety.
Written by Geoff Green, at http://profitable-investing.com Copyright 2008.
Topics: Selected Stocks, Stock Analysis, lessons |
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