Saturday, October 28, 2006
Volume 7, Issue 14

In This Issue:

1) Current Market Metrics - Mutual Fund Flows
2) Recent Blog Research Features
3) Viewing the Market
    A) Thirty Years of Small Caps
    B) Conventional Wisdom Buys Nothing
4) Feature Stock #1 - Lam Research Corporation (LRCX)
5) Feature Stock #2 - Fluor Corporation (FLR)
6) Additional Stocks - Worth a Further Look
    A) PACCAR, Inc. (PCAR)
    B) DryShips (DRYS)
7) About VitalStocks.com
8) DISCLAIMER:  Use of this newsletter signifies your acceptance of this disclaimer.

 RSS Feed available: Fresh content each weekday http://feeds.feedburner.com/VitalstocksInvestingNewsletterDigest

This issue sponsored by...
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1) Current Market Metrics:

- BOSTON (MarketWatch) -- Mutual-fund investors continued to pump money into U.S. stocks but a slower pace this week, as the funds posted at inflow of $599 million for the week ended Oct. 15, down from $1.75 billion the previous week, TrimTabs Investment Research said Thursday.

Source: http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=google&guid={8136DB1B-2D2F-485B-98BC-F493C2A06B43}

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Independent Data on Fund Flows
Data As Of: 25 Oct 2006

- Including ETF activity, Equity funds report net cash inflows totaling $1.641 billion in the week ended 10/25/06 with Domestic funds reporting net inflows of $1.137 billion and Non-domestic funds reporting net inflows totaling $505 million;

- Money Market funds report net cash outflows of -$9.061 billion

Source (Much more information available): http://www.amgdata.com/

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2) Recent Research Articles - Actionable investment research and commentary, unedited, straight from the pros.

2A)    (HOG) - Harley-Davidson, Inc. - Steadily increasing cash flows from operating activities:

http://vitalstocks.com/blog/2006/10/hog-harley-davidson-inc-steadily.html

2B)   (HUM) - Humana, Inc. - Two analysts have raised their estimates for this year, while three have done so for next year:

http://vitalstocks.com/blog/2006/10/hum-humana-inc-two-analysts-have.html

2C)    (PRE) - PartnerRe, Ltd. - company topped the Street's estimate in 10 out of the past 11 quarters by an average margin of 20.4%:

http://vitalstocks.com/blog/2006/10/pre-partnerre-ltd-company-topped.html

2D)   (TEVA) - Teva Pharmaceutical Industries - Over the past 16 quarters, TEVA beat analysts' earnings expectations on 14 occasions:

http://vitalstocks.com/blog/2006/10/teva-teva-pharmaceutical-industries.html

2E)   (FCX) - Freeport-McMoRan Copper & Gold, Inc - Compared to the prior-year period, earnings soared 83.7%:

http://vitalstocks.com/blog/2006/10/fcx-freeport-mcmoran-copper-gold-inc.html

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3) Viewing the Market:  Financial analysts / journalists comment on the current stock market and future direction.

3A) Thirty Years of Small Caps

Jim Oberweis and his team, from The Oberweis Report newsletter, explain that while year-by-year results can be volatile, disciplined investors who remain fully invested in a portfolio of high-growth equities selected using these featured experts’ methodology have historically achieved an exceptional average rate of return over long periods of time. Discover what Oberweis’ team has to say about their history of investing. Then take a look at a few holdings from their Current Portfolio.

Commentary from October 2

Click here to find out more!
Thirty years ago Jim Oberweis and his team began publishing a model portfolio with a stated objective of outperforming the Dow Jones Industrial Average (DJIA) by an absolute 10 percentage points per year. Oberweis and his team met that objective in 19 of the 29 full calendar years. Note that despite an excellent long term track record, not every year has been a winner. For example, Oberweis and the team trailed in 1993 and 1994 and had a challenging period relative to the index from 1996 through 1998. They experienced isolated one-off years of underperformance like 1984 as well. On the other hand, those challenging times were redeemed by fantastic return years, such as 1980 (+105.0%), 1991 (+87.5%), and 2003 (+74.7%). So far in 2006, Oberweis and his team are trailing the Dow by a fairly wide margin through September 30th and 2006 will likely end up as one of those years in which the types of companies targeted by Oberweis' process did not perform as well as the broader market.

Of course, the number that really counts is the long term average return. Over longer periods of time, Oberweis' Model Theoretical Portfolio has substantially exceeded his expectations with a compound rate of return of 23.4% compared to 8.5% for the DJIA, 8.8% for the S&P 500 Index (excluding dividends), and 11.2% for the NASDAQ Composite. Oberweis and his team's return excludes transactions costs and dividends and is for a theoretical portfolio using closing prices on the last Friday of each month.

Psychologists have repeatedly documented that the human mind tends to overweight recent experience when forecasting the future. When Oberweis' process works well, his readers think he and the team are heroes. Assets flow into their funds and subscriptions skyrocket. During years in which Oberweis and his team’s style falls out of favor, they typically experience much quieter business activity. However, in their opinion, this effect is neither prudent nor rational. If there is a time to overweight, Oberweis and his team believe the most favorable risk/reward opportunities tend to fall after a period in which their style has been out of favor. In other words, in times like the present, when companies within Oberweis’ universe seem to be out of style and are trading at below-average P/E valuations. Oberweis and the team believe years like 2006 tend to be great buying opportunities, though ironically such points also tend to be the time most people are least likely to buy.

Over the long run, Oberweis and his team believe that these long-term results indicate the use of the “Oberweis Octagon” method of stock selection can help produce superior investment returns. This is the same stock selection process used for The Oberweis Funds, though individual stock selections may differ.

Oberweis and his team believe that much of their success over the last thirty years was achieved by looking in areas where others are not. Historically, they have sought out smaller companies in the U.S. which do not tend to attract as much institutional attention. Last year they told you that they would be expanding their efforts into other countries and in October 2005 launched their China Opportunities investment strategy. In 2007, Oberweis and his team are planning to expand their international effort with yet another international strategy. As you will see, they are planning to devote significant resources in the years to come toward applying their same philosophy around the world to discover hidden values. Their research office in Hong Kong represents a significant commitment toward unlocking and discovering value in China, as evidenced in portfolio selections such as Focus Media Holding (FMCN). Through their U.S. team, their China team, and their International team, Oberweis and his team believe their opportunity to find exceptional investment ideas will be even better than it ever has been.

The lesson from their long-term record is that, although year-by-year results can be volatile, disciplined investors who remain fully invested in a portfolio of high-growth equities selected using their methodology have historically achieved an exceptional average rate of return over long periods of time.

A couple of holdings from the Current Portfolio…

DataLink Corporation (DTLK) is an information storage architect focusing on the analysis, implementation, and support of information storage infrastructures that store, protect, and provide continuous access to information. Their core capabilities include: protection against planned/unplanned downtime while providing fast 24/7 access to information and data recovery solutions such as local and remote backup, snapshot and replication; and storage management solutions including consolidation, storage area network (SAN) management, virtualization, and storage resource management (SRM), among others. As an independent architect, the company is not tied to any one platform or set of products, providing their customers the flexibility to choose hardware and software from leading innovators. Revenues in the most recent second quarter increased 39% to $39.8 million vs. $28.7 million in the same year-ago quarter. Earnings per share in the quarter grew to $0.18 from $.04 in the prior-year second quarter.

Oplink Communications’ (OPLK) principal activity is to provide design, integration, and optical manufacturing solutions for optical networking components and subsystems. The company produces fiber optic subsystems, integrated modules and components for next-generation, all-optical dense wavelength division multiplexing (DWDM), optical amplification, routing, monitoring, and conditioning applications. The products are categorized into two groups: Bandwidth Creation Products which include wavelength expansion and optical amplification products. The Bandwidth Management Products include wavelength performance monitoring, protection and optical switching products. Customers include telecommunications, data communications and cable TV equipment manufacturers such as Huawei, Siemens, Tellabs, Marconi and others. Oplink has manufacturing operations in San Jose, California, Zhuhai and Fuzhou in China. The company also acquired 96% of F3 Inc in fiscal 2006. In the company’s latest reported fourth quarter, sales increased 90% to $16.9m from $8.9m in the same period of 2005. Earnings per share during the same period increased 125% to $.09 vs. $.04 in the same period of 2005.

Other Current Portfolio stocks include…

LifeCell Corp. (LIFC) develops and markets biologic products for the repair or replacement of damaged or inadequate tissues. The company's core preservation technology produces an acellular tissue matrix, which retains the essential biochemical and structural components necessary for normal tissue regeneration. The company's product development programs include a small diameter vascular graft as an alternative to autografted blood vessels, orthopedic applications of its acellular dermal matrix and Thrombosol, a formulation for storage of platelets.

Metretek Technologies, Inc. (MEK) designs, manufactures and sells natural gas metering systems and automated systems to monitor and record the energy consumption of industrial and commercial consumers; Southern Flow Companies, Inc., which provides measurement services and equipment to natural gas producers, operators and transporters. Through its two subsidiaries, the company provides a spectrum of measurement technology and services to the energy industry, including applications in field operations, transportation and distribution facilities, and consumers markets.

Saba Software, Inc. (SABA) is a provider of software and services that enable businesses and governments to create and deploy global networks over the Internet that connect people to learning. The Internet-based software platform and related services enable organizations to procure and deliver learning and systematically close knowledge and competency gaps across their base of employees, customers, partners and suppliers, known as the extended enterprise. The company offers learning providers an Internet-based global marketing and distribution channel.

Source: http://www.zacks.com/experts/featured/view_article.php?art_id=2691&newsletter_id=28

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What do we pick?

VitalStocks newsletter presents the two best ideas from the commentary of the week.  Here is the secret:  We take all those ideas and compare each stock to various industry averages.

Professionals pay thousands of dollars per year for access to this information.  Our publishers feel some investors need to take a test drive before purchasing the investing newsletters of their choice.

Submit all comments or ideas: webmaster@vitalstocks.com

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3B) Conventional Wisdom Buys Nothing

Kelley Wright, editor of the Investment Quality Trends newsletter, notes that unlike conventional wisdom, dividends are tangible evidence of profits that can be exchanged for real goods and services. Read this featured expert’s investment outlook and find out what he has to say about such dividend dollars. Afterward, take a sneak peek into Wright’s Timely Ten portfolio.

Investment Outlook from October 13

Click here to find out more!
2006 isn’t shaping up as a stellar year for the conventional wisdom. Take interest rates for example. As recent as late spring a wide swath of the punditry was still projecting that Fed Funds were headed to 6.50%. Oops.

Oil at $100 per barrel was a lay up, until it topped at $83. Of course oil is headed back to $40 now according to some of the very same folks. Hmm.

Gold was going to $1,000 as sure as the Sun rises in the east. So it only went to $750; what’s $250 between friends?

Traditional defensive plays like Utilities and Big Pharma were all the rage this summer because September was going to be ugly. A glance at Kelley Wright’s quote screen would suggest the Apocalypse has been rescheduled.

With fear about the health of the economy fading quickly, Big Pharma is starting to look a little toppy; who needs to be defensive when we’re having a soft landing? Even the bond market is rethinking the hard landing scenario based on the profit taking all along the yield curve. Perhaps those three Fed cuts don’t seem like such a slam dunk now.

Of course everything could change again on the first Tuesday of November when the minority party becomes the majority party. Heaven help you if you’re long the pharmaceuticals and tobacco! As for dividend paying stocks, you can kiss those lofty valuations goodbye when Rep. Charley Rangel takes over at Ways and Means and unwinds those pesky 2003 tax cuts.

Kelley Wright’s point is that conventional wisdom as a currency is only worth what it will buy, and the last time he checked that was absolutely nothing.

The only currency Wright knows that does have current buying power is the dollar, which is on a tear and confounding every pundit with an opinion. You’ve got to love Mr. Market; he certainly knows how to keep them guessing.

One thing we don’t have to guess about is the dollars that come to us in the form of dividends. Unlike conventional wisdom dividends are tangible evidence of profits earned and shared and can be exchanged for real goods and services.

Since we need these goods and services to live in the real world, Wright and his team plan to continue to focus on the only dependable means they know to consistently generate those dividend dollars; high quality Select Blue Chip’s that are purchased at historic levels of Undervalue.

While this may not qualify as wisdom, it most certainly meets the definition of unconventional when juxtaposed to the stream of hype and hope that emanates from the environs of Wall and Broad Streets.

The Timely Ten include:

Citigroup, Inc. (C), the preeminent global financial services company with some 200 million customer accounts in more than 100 countries, provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage, and asset management.

American Int'l Group (AIG) is the world's leading U.S.-based international insurance and financial services organization, the largest underwriter of commercial and industrial insurance in the United States, and among the top-ranked U.S. life insurers. Its member companies write a wide range of general insurance and life insurance products for commercial, institutional and individual customers through a variety of distribution channels.

Home Depot (HD) is the one of world's largest home improvement retailer. The company offers a level of service unprecedented among warehouse-style retailers. Home Depot stores cater to do-it-yourselfers, as well as home improvement, construction and building maintenance professionals. The Home Depot currently operates in the USA, Canada, Chile, Puerto Rico, and Argentina. The company also operates EXPO Design Centers across the U.S. and Villager's Hardware in New Jersey.

Source: http://www.zacks.com/experts/featured/view_article.php?art_id=2697&newsletter_id=15

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Learn the ABCs of Technical Analysis

Join a select group of fellow active traders for an exclusive online seminar: 'What You Need To Know About Technical Analysis', presented by real-world trading experts AJ Monte & Rick Swope, compliments of E*TRADE Securities. Learn support and resistance, exit strategies, manage risk. Qualify now.

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4) Feature Stock #1 – Lam Research Corporation (LRCX)

Lam Research's earnings estimates have dramatically increased since the company beat expectations. This year's numbers have jumped 10% just in the past week. Next year's estimates have increased 12.3% over the past week. The company has exceeded earnings estimates in 13 straight quarters. Nine analysts have raised their numbers for this year, while five have done so for next year.

Full Analysis

Lam Research Corporation (LRCX) engages in the design, manufacture, marketing, and service of semiconductor processing equipment used in the fabrication of integrated circuits. Its products include etch systems, including dielectric etch products, conductor etch products, the 2300 Versys systems, Lam 2300 process chambers, and resist strip products, as well as cleaning products.

These systems are used in the production of a range of advanced logic and memory devices, as well as micro-electromechanical systems applications. The company markets its products and services primarily to companies involved in the production of semiconductors in the United States, Europe, Japan, Korea, and Asia Pacific.

The company more than tripled third-quarter earnings over last year. LRCX said net income was $163.9 million, or $1.13 per share. Analysts were predicting earnings per share of $1.02. Revenue for the quarter soared to $604.4 million from $320.9 million for the same period last year and ahead of the average analyst estimate of $593.3 million. New orders for the company increased 13% to $725 million from the second fiscal quarter.

"September results reflect another quarter of strong revenue and earnings growth for Lam Research," stated Steve Newberry, Lam Research's president and chief executive officer. "Operating margins and income achieved record levels, and demonstrate the leverage throughout our business model."

"In addition, we generated record levels of cash from operations, a consequence of our focus on a disciplined approach to asset management. Clearly, these are excellent results and provide a solid foundation for future opportunities."

Earnings estimates have dramatically increased since the company beat expectations. This year's numbers have jumped 10% just in the past week. Next year's estimates have increased 12.3% over the past week. The company has exceeded earnings estimates in 13 straight quarters. Nine analysts have raised their numbers for this year, while five have done so for next year.

LRCX is trading at 11.9x this year's estimate of $4.19 per share, well below the long-term growth rate of 17.14%, giving the stock a PEG ratio of 0.69.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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Actionable, Professional Research updated daily

Our daily professional research content blog is up and running.  We post new research daily.  See it here:  http://www.vitalstocks.com/blog/index.html

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VitalStocks.com Research Summary:
Data as of: 26 Oct

Price / Cash Flow Ratio is 73.1% of the Industry Average.

Forward Price to Earnings Growth (PEG): 0.16

Debt / Equity Ratio is 115.8% of the Industry Average.

Net Profit Margin is 172.3% of the Industry Average.

Return on Equity is 200.1% of the Industry Average.

Current P/E Ratio is 70.1% of the Industry Average.

5-Year Avg. Pre-Tax Profit Margin: 205.9% of the Industry Average.

Price/Sales Ratio is 119.7% of the Industry Average.

Income Per Employee is 244.2% of the Industry Average.

MSN Money Price Target:  http://moneycentral.msn.com/investor/research/wizards/srwtarget.asp?Symbol=lrcx

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5) Feature Stock #2 – Fluor Corporation (FLR)

Fluor Corporation (FLR), a Zacks #1 Rank stock, exceeded analysts' earnings expectations in four out of the past five quarters, most recently by 11.1%. On Aug 3, the Board of Directors declared a quarterly cash dividend of 20 cents per common share of stock. FLR is currently yielding 1.0% and has a five-year average dividend yield of 1.5%.

Tags: FLR, Fluor Corporation, Stock-market, Stocks, Investing, Stock Trading, Finance, Trading, Investing Newsletter, Stock Picks, analysts estimates

Full Analysis

Fluor Corporation provides engineering, procurement, construction, operations and maintenance and project management services worldwide. The company serves industries, such as oil and gas, the United States Government, chemical and petrochemicals, life sciences, manufacturing, power and transportation infrastructure.

FLR beat the Street's earnings estimate in four out of the past five quarters by an average margin of 26.0%. In each of the four quarters the company produced a double-digit earnings surprise. Earnings per share grew 10% over the past five years and are forecasted to grow by a larger magnitude going forward—14% over the next 3-5 years. The company is expected to release its third-quarter results on Nov 6.

On Aug 7, FLR reported second-quarter earnings per share of 80 cents. This amounted to an 11.1% positive earnings surprise and a 37.9% year-over-year improvement. Revenues came in at $3.46 billion versus $2.92 billion in the second quarter of 2005. The company said it received a record $5.75 billion in total new contracts compared to $3.23 billion a year earlier. FLR's oil and gas and industrial and infrastructure segments led the way with $2.6 billion and $2.3 billion, respectively, in new awards.

For the first six months of 2006, FLR posted profits of $155.4 million. This compares with $31.0 million achieved in the first six months of 2005, which included a pre-tax charge of $65.0 million for a hotel project in the Caribbean. Revenues jumped 22.4% to $7.1 billion from $5.8 billion. The company reiterated its guidance for full-year 2006 earnings per share between $2.90 and $3.20.

The Board of Directors declared a quarterly cash dividend of 20 cents per common share of stock on Aug 3. The company has a current dividend yield of 1.0% and a five-year average dividend yield of 1.5%.

The company's return on equity of 18% illustrates management's success in enhancing shareholder value. This is nearly three times greater when compared to the industry average of 7%. FLR is a FORTUNE 500 company that is ranked #1 in FORTUNE magazine's “Engineering, Construction” category of America's largest corporations.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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Actionable, Professional Research updated daily

Our daily professional research content blog is up and running.  We post new research daily.  See it here:  http://www.vitalstocks.com/blog/index.html
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VitalStocks.com Research Summary:
Data as of: 26 Oct

Price / Cash Flow Ratio is 27.0% of the Industry Average.

Forward Price to Earnings Growth (PEG): 1.55

Debt / Equity Ratio is 68.9% of the Industry Average.

Net Profit Margin is 101.3% of the Industry Average.

Return on Equity is 219.8% of the Industry Average.

Current P/E Ratio is 11.8% of the Industry Average.

5-Year Avg. Pre-Tax Profit Margin: 136.8% of the Industry Average.

Price/Sales Ratio is 26.9% of the Industry Average.

Income Per Employee is 130.6% of the Industry Average.

MSN Money Price Target:  http://moneycentral.msn.com/investor/research/wizards/srwtarget.asp?Symbol=flr

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6) Additional Stocks - Worth a Further Look

6A) PACCAR, Inc. (PCAR)

PACCAR, Inc. (PCAR), which was first presented as a Growth and Income pick on Jul 25, exceeded analysts' earnings expectations in 15 out of the past 16 quarters. The company recently reported record profits and revenues for the third quarter and for the first nine months of 2006. Consensus estimates for both 2006 and 2007 have been trending higher. This Zacks #1 Rank stock is currently yielding 1.3% and its return on equity of 32% crushes the industry average of 6%.

Full Analysis

PACCAR, Inc. designs, manufactures and distributes light, medium and heavy-duty trucks, which are used for over the road and off highway hauling of freight, petroleum, wood products, construction and other materials. The company also participates in the aftermarket distribution of parts worldwide and the manufacture of industrial winches. Finance and leasing services are also provided by PCAR to its customers and dealers.

PCAR, which was first featured as a Growth and Income stock on Jul 25, is up nearly 16%. Since its debut, the company added two more earnings surprises to its nearly spotless history of exceeding analysts' earnings expectations. PCAR has now topped the Street's estimate in 15 out of the past 16 quarters by an average margin of 15.0%. In late July, the company was a Zacks #2 Rank stock (buy). It now holds the coveted status of a Zacks #1 Rank stock.

On Oct 24, PCAR reported third-quarter profits of $403.6 million, or $1.61 per share. This beat the Street's estimate of $1.50 by 7.3% and marked a new record for the company. The result also represented a 35.3% year-over-year improvement when compared to earnings of $1.19 achieved in the third quarter of 2005. Revenues jumped 18.9% to a record $4.21 billion, compared to $3.54 billion in the prior-year period.

For the first nine months of the year, both profits and revenues hit all-time highs as well. Profits soared 36.5% to $1.12 billion, while revenues rose 17.4% to $12.23 billion when compared to the first nine months of 2005. PCAR increased revenues, expanded gross margins and grew profits for the past four years.

Consensus estimates for both 2006 and 2007 have been trending higher. Profit forecasts for 2006 are up 2.5% over the past 60 days, while estimates for 2007 have risen 4.0% over the same period of time. Earnings per share are projected to grow 12% over the next 3-5 years. The industry's expected growth rate currently sits at 6%.

During the third quarter, PCAR bought back 1.1 million of its common shares at a cost of $59.4 million. This effectively put an end to the company's five million share repurchase program. PCAR repurchased 10 million shares over the past two years. Vice Chairman Mike Tembreull stated, “PACCAR's profits and cash flow are excellent and the company's shares represent attractive long-term value.”

The Board of Directors declared a quarterly cash dividend of 20 cents per share on Sep 12. The dividend is payable on Dec 5 to stockholders of record as of Nov 17. The company is currently yielding 1.3%. PCAR's return on equity is more than five times greater than that of the industry average—32% compared to 6%.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

http://vitalstocks.com/blog/2006/10/pcar-paccar-inc-topped-streets.html

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6B) DryShips (DRYS)

Vivian Lewis and her team, from the Global Investing newsletter, discuss a recent bounce back experienced by shares of DryShips. Find out what these featured experts have to say about the company and the industry in which it operates. Also, read excerpts from various financial publications regarding the dry bulk carrier company.

Them Dry Ships from October 2

DryShips (DRYS) bounced back when its reported numbers missed forecasts. Buying began as investors realized that 97% of the fleet was being chartered in the quarter with TCE rates (average daily revenues) of over $20,000 when daily vessel operating expenses were around $4,000. Even with TCE rates down 40% from a year ago, DRYS is profitable and it is currently pays a dividend yield of nearly 6%.

Dryships’ fleet is 29 dry bulk ships and it recently agreed to buy 5 more, all to ship coal, iron ore, and grain. China, coal and iron ore poor, continues robust demand for the commodities DRYS hauls. The dry bulk market will strengthen as the global economy expands, and its spot-market focus means DRYS should continue to see its coffers as full as its ships. DRYS’ fleet is aged 11 years, while the average drybulk fleet age is nearer to 16 years. The economic life of a drybulk vessels is 25+ years. DRYS has a young fleet and moreover focused on Panamax vessels, the workhorses of drybulk. The daily Panamax spot rate at end June was $19,500; today it is 27,500. The stock and its earnings will be volatile.

Motley Fool published “DryShips: An Investing Shipwreck” in which CEO George Economou and DRYS were attacked for missteps from the default of Economou’s Alpha Shipping (brought down by the holders of its convertible notes in 1999) to related-party ship purchases reported in DryShips’ 2005 initial public offering. The article was based on a piece by Kate Welling, former Barron’s reporter, which came out 18 months ago, and it in turn was based on material which was in the prospectus for DRYS’ ipo. This is old news.

Here is an extract of an article by Alaric Nightingale in Bloomberg, reprinted with permission from Fullermoney.com (London) on DRYS: “While the Baltic Dry Index, a benchmark for freight rates, has risen 49% in the past 12 months, the price for individual shipments has risen even more at times in the face of demand from China. BHP Billiton, the world’s biggest mining company, in Feb. paid $16,250 a day to hire a ship to send 70,000 tons of Australian iron ore to China. Six months later, the company paid almost three quarters more–$28,000 a day–for the same voyage, according to London-based shipbroker Galbraith’s Ltd.

“Chinese industrial production rose 16.7% in July, and the economy expanded 11.3% in the second quarter. The iron ore, coal, and coke Chinese companies sucked in this year fed record steel production. China produced 36.1 million metric tons in July, up 22% from a year earlier, according to the Brussels-based International Iron and Steel Institute, boosting demand for export and import shipments at a stroke.

“The demand for iron ore and coal is pretty substantial, unless you think that the market in China is going to tank, which I don’t think is going to happen,’ said Scott Black, who manages $1.6 billion for Delphi Management Inc. in Boston.”

David Fuller adds: “the Baltic Dry Index is interesting because it is pushing higher once again. This is occurring at a time when lots of financial pundits are warning of recession in the USA, a sharp slowdown in China and the rest of Asia, and a collapse of commodity prices. I respectfully disagree, although it would be unkind of me to add that we have heard similarly pessimistic views over the last three years, usually from the same sources. To the extent that the Baltic Dry Index is relevant, it appears to be bullish.” (cf ADRWatch).

DRYS agreed to sell the 1995-built, 71,747 dwt panamax bulkcarrier, MV Panormos, for about $35 million, to an outside buyer. Delivery will be in Q4. DRYS will purchase a 2000-built, 74,716 dwt panamax carrier (to be renamed MV Redondo) for about $40.75 million also to be delivered, charter-free, in Q4. DRYS also signed contracts for two panamax drybulk vessels to be built in China for $33.25 million each, to be delivered in Q4 2009 and Q1 2010.

Source: http://www.global-investing.com/
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Learn the ABCs of Technical Analysis

Join a select group of fellow active traders for an exclusive online seminar: 'What You Need To Know About Technical Analysis', presented by real-world trading experts AJ Monte & Rick Swope, compliments of E*TRADE Securities. Learn support and resistance, exit strategies, manage risk. Qualify now.

http://findinvestinfo.com/vstocks/nl/119

==============================================

7) About VitalStocks.com:

I believe America has incredible opportunities for people to succeed by making money in the stock market. After making and losing lots of money myself, I realized that there were no sources were investors could get unbiased valuable information.

That is what made me begin this project.  I continue to work with the top professional investing newsletters to bring “capsules” of their best stock picks to you.

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