At the conclusion of every piece I've ever written for The Motley Fool, I've invited comments or questions. That's not a perfunctory invitation; I really want to know what readers think of the companies I write about. As a result, I've received some wonderful notes from some highly intelligent investors.
This time I'd especially like to hear from my Foolish friends. The issue: I can't for the life of me justify why a company like Diamond Offshore
Let's quickly undertake a possibly strange comparison between, for instance: the major newspaper companies and drillers. In contrast to the drillers' 50% discount to the broader markets, New York Times
Now let's talk about my beloved PEG ratios, (P/E divided by five-year anticipated growth rate, such that lower numbers are better and anything below 1.0 is unusually compelling). For our three drillers, the average PEG ratio is an almost unbelievable 0.39. That contrasts to more than a 3.6 average for the two walking-wounded newspaper publishers.
All of which leads to our final metric stop: relative betas. The three drillers average a beta of 1.4, indicating that their shares tend to bounce around more than the general market and far more than the publishers, who sport a 0.7 average.
There you have it -- that old cyclicality charge. For my money, I'm not opposed to being tied to an industry with bright prospects whose relationship to commodities pricing occasionally causes its shares to bounce. Better that than a steady downward spiral. I'd welcome the opinions of interested Fools.
For related Foolishness: