Arnett Lanse Waters: Investment Ideas
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countries that have a lot of natural resources will continue to make shipments to countries that don’t. With the recession, shipping has declined, and Diana has been unfairly affected. But the shipping world has not ceased. With growth in world population, shipping is going to increase. DSX’s share performance began lagging behind movement in the Dow back in July of 2009. Most of its peers have also lagged the Dow, and that, to us, has been an indication that valuations are a little optimistic for Dow components. At just under $15 a share, prices have been hovering in the middle of their 52-week range after trending higher in April. Our 12-month target price is $21.

Are there any companies currently in the news that you like?
I happen to like Transocean Ltd. (RIG) [which owned the rig destroyed in the April 20 explosion preceding the oil spill in the Gulf of Mexico]. Regardless of what anyone says, we’re going to need fossil fuel for a long time. Transocean is an international offshore contract driller in the oil and gas industry. The company owns or operates 138 mobile offshore drilling units. It is a leader in deep-sea drilling and has five ultra-deepwater drill ships under construction. Oil has been relatively stable, considering the level of instability in the global economy, in the range of $70 to $80 per barrel. We will see an expansion of exploration and drilling, which means revenue for the drilling companies. Even though Transocean is under some pressure right now because of the accident in the Gulf, shares are holding up rather well. Shares have been downgraded from “buy” to “hold” with some analysts, and revenues were lower in the last report but better than most expected. Despite all this, shares didn’t fall off drastically. If anything a little selling will create a buying opportunity. I believe the stock will trade at its 52-week high again in the next six months. Our 12-month target: $94.50.

John Simons is the personal finance editor for Black Enterprise.