Dry Ships Inc. (DRYS) – $90.99
Both Blain and Rajin highlighted DryShips (DRYS) this past week as I linked to them in my weekend post but I am not so sure if I agree with their conclusions. Blain calls the stock breakout a beauty and Rajin grouped it in as a top weekend hold (actually he noted TBSI as his top hold).
Investor’s Business Daily placed DRYS at #8 on its IBD 100 which is fine but it raises suspicion because the stock didn’t even make the list the prior week. How can a stock go from not listed to #8 in one week? I have been a subscriber for almost 8 years but I have never understood or agreed with the way IBD mysteriously manages the IBD 100. DRYS could have only been at 101 at best so I just don’t understand how it jumps to #8.
Anyway, to my point: the IBD 100 has become more of a bandwagon list rather than a guide towards trending stocks. More specifically, they are usually late or on the tail end of trends for stocks that have already established runs (in my opinion based on reading the paper). Will DRYS prove them later again?
In any event, here are some amazing fundamental numbers for DryShips:
35% annual EPS growth
484% EPS growth last Quarter
2,064% EPS growth two Quarters ago
195% Sales growth last quarter
46% Return on Equity
Next Earnings Due: 5/29/08
So what do I see?
I see a decent consolidation over the past few months but I have a problem with the current pattern that is forming if it does not test former highs near $130. Volume is increasing as it moves higher but the stock is starting to struggle near the last peak of $88.
In addition to the basic weekly chart, I see the 30-week moving average starting to turn-over and point south for the first time in years. This does not mean that the stock can’t move higher and reverse the course of that average but the odds are starting to suggest otherwise.
All in all – I am not a buyer of the stock at this level. It may be a solid short term buy for traders that make these types of plays such as Blain and Rajin but it does not fit into my criteria for a trend trading opportunity. A challenge of new highs or a push into new high territory will change my perspective of the stock.
Let’s see where it goes. What do you think and in what time frame?