Stone Fox Capital's  Instablog

Atwoods Oceanics (ATW) as usual posted their normal earnings beat. ATW is a semi deep water focused oil/gas drilling firm. Earnings were down from the solid $1.16 last year, but they did report strong 15% YOY earnings growth for fiscal 2009. Not bad for a stock trading at roughly 10x earnings. Now with oil back around $80, the demand for their services appears to be picking up as evidenced by a couple of recent contracts. Earnings likely bottomed out this Q and analysts expect earnings of at least $4.04 for fiscal 2010. Look for earnings to continue rising with the improved demand environment and new builds on the horizon.


4:59PM Atwood Oceanics beats by $0.06, beats on revs (ATW) 37.96 +0.97 : Reports Q4 (Sep) earnings of $0.75 per share, $0.06 better than the First Call consensus of $0.69; revenues fell 18.5% year/year to $131 mln vs the $128.4 mln consensus.

Just two weeks ago, Stone Fox Capital talked about the importance of a weekly jobless claims figure below 500K. The number didn't make it reporting in at 505K (502K originally), but that is where the key of understanding the future is a lot of times more important then the number reported.

On Wednesday, the consensus estimate for Weekly Jobless Claims by Bloomberg is 495K. The low estimate is an incredible 460K with the high only 500K which would happen on its own to be a low for this cycle. So while the market sweated the number reported last Thursday, it was without doubt that the next sequence of numbers would be lower and possibly much lower just the next week. Don't fight the trend by sweating weekly nuances. Especially considering we're most likely to see sub-400K numbers before the trend even becomes a question.


Released on 11/25/2009 8:30:00 AM For wk11/21, 2009

	Prior	Consensus	Consensus Range
New Claims - Level	505 K	495 K	460 K to 500 K

Cloud Peak Energy (CLD) is an IPO spin off from Rio Tinto (RTP) that has huge potential. By all accounts, the deal will be cheap as evidently RTP needs the cash. The deal is expected to price in the $16-18 range giving it a7 PE multiple. Very odd considering the PE multiples in the 20s that most coal producers trade at currently.

CLD is completely focused on the Power River Basin (PRB) area in Wyoming and Montana. The surfice coal in the PRB is much easier to mine then the mountaintop mines in the East and especially in Central Appalachia. Also, the coal is 'cleaner' then the East because of lower sulfur amounts. Now honestly just about every other energy option is 'cleaner' then coal such as natural gas, solar, and wind. Unfortunately coal is the cheapest option and the US along with emerging economies like China and India are somewhat stuck using it so demand is expected to grow.

Another issue with the Central Appalachia is that it has declining reserves and faces regulatory issues. The government is currently suspending 79 mine applications to research environmental issues. The PRB is expected to fill the loss of production from this area going forward.

What we don't like about CLD is that it's completely tied to steam coal used for energy and lacking the much more attractive metallurgical coal used in making steel. This might somewhat impact the multiple comparisons.

Watch the roadshow presentation for all the details - Roadshow.

CLD expects to price on Thursday so anything close to the current price range is very attractive. It is hopefully being overlooked though Cramer has been pumping it all week so it seems unlikely that the market will ignore it.