Tuesday, January 22, 2013

Are You Aware of Aware Inc.?

Aware Inc. (NASDAQ:AWRE) is a company that supplies advanced signal processing technologies to a diverse range of large and growing industries. It operates in two segments: Biometrics & Imaging and DSL(Digital Subscriber Line) Service assurance where it focuses on three product lines: its biometrics and imaging, DSL server assurance and patent management.

So what is it that they do? For the most part they offer software products to a diverse range of clients. They hold over 200 patents which on occasion they sell. One such sale was last September to TQ Delta, LLC for $16 million dollars.
In December they gave their share holders a special dividend of $1.80 a share.
Maybe it is time you became aware of Aware, Inc.

Monday, January 21, 2013

A Pick Under $10

Wabash National Corporation (NYSE:WNC) designs and manufactures transportation related products such as truck trailers. The energy sector is a place for long term usage of their products and the increase in domestic drilling puts them in a perfect position to take advantage of the oil industries needs.
They have an agreement to produce 2500 frac tank units over the next five years resulting in $70 million dollars in sales. They are well positioned in the market to take advantage of the need for not only frac tanks but also oil field low beds, mixers, flowback tanks, production tanks and more. Besides the oil industries need, the recovering trucking industry with their aging fleet equipment will also fuel demand for Wabash's other products.
My main concern would be if sales fall and the cash flow dries up. They are counting on their free cash flow to pay down debt early that comes due in 2018 and 2019.

Friday, January 18, 2013

Deep Profits With Deepwater Oil Drillers

It has been  almost three years since the April 2010 Gulf oil spill. Billions are being  paid in settlements.  In late November of 2012 the United States government auctioned more than 20 million acres of offshore leases off  the Texas coast . The vast majority of the winning bids were for deep water drilling tracts . For the sake of argument we will say  a water depth of 1300 feet is deep water drilling and ultra deep starts at about 5000 feet. The drilling sector has had a rally of late, how could they not with prices ranging all the way up  to 600 thousand dollars a day range for ultra-deep drilling.  The deeper the drilling the more costly the price. If it comes up dry, too bad you paid for it! With the every expanding global need for energy they should do very well over time.

If I had to buy one right now it would have to be Ensco Plc (NYSE:ESV).  Ensco is a British based company with the advanced technology needed to exploit off shore oil and gas. They have 9 ultra and deep water drill ships and  have the worlds second largest offshore rig fleet. They have nine billion dollars worth of contracted  revenue backlog.  They also have an outstanding safety record.

Transocean (NYSE:RIG) Is a driller that doesn't have that outstanding safety record. They are the worlds  largest offshore drilling contractor. They have 48 of what they call High-Specification Floaters which are deepwater, ultra-deepwater and harsh environment drilling rigs out of a fleet of 82 mobile offshore drilling units. They have a revenue backlog of close to 30 billion dollars.  Even with all the fines and settlements they face in the gulf spill of 2010 and the Brazilian spill of November 2011 they are going to earn a fair profit. But now might be the time to get into the stock if you have the patience to wait for all the litigation’s to play out.

Noble Corporation (NYSE:NE) is another global offshore drilling contractor. They have 79 offshore drilling units scattered around the globe.  They too have new rigs coming on line. They had a problem last year with down time issues which are now supposed to be resolved and if they are it should show in there 4th quarter results scheduled for January 24th.

The reason one should be so optimistic on the off shore oil and gas drillers is that the large oil companies  have just about no where else to go to find that last great oil find except under the oceans. This is the last bastion for ever depleted fields.  These three companies have figured out that just because their rigs can drill in 6000 feet of ocean they can still be used at shallower depths. The global rise in demand by developing nations for oil also necessitate a need for new areas of oil and gas. This may be a good time to buy.