FLS $113.72 +3.72 - Flowserve
There was no further weakness and FLS shook off the downgrade and rebounded +8 points from Tuesday's low.
Flowserve was downgraded the prior week by Robert Baird just as it hit a new high at $118. Their price target was $120 and he felt it was fairly valued. At the same time Flowserve was upgraded by S&P and Moody's. Flowserve is expected to earn just over $5 in 2008 and $10 by 2010. Even according to Baird this is not priced into the stock. I think they should be immune to any light market selling with support at $105 but could suffer in any real downdraft.
Flowserve Corporation (Flowserve) is a manufacturer and aftermarket service provider of flow control systems. The Company develops and manufactures precision-engineered flow control equipment, such as pumps, valves and seals, for critical service applications. Flowserve offers a range of aftermarket equipment services, such as installation, advanced diagnostics, repair and retrofitting. The Company sells its products and services to more than 10,000 companies, including engineering and construction firms, original equipment manufacturers (OEMs), distributors and end users. The Company operates through three business segments: Flowserve Pump Division (FPD) for engineered pumps, industrial pumps and related services; Flow Control Division (FCD) for engineered and industrial valves, control valves, actuators and controls and related services, and Flow Solutions Division (FSD) for precision mechanical seals and related products and services.
Breakout trigger: $110 Hit 4/16
Position: OCT $120 Call FLS-JD @ $10.40
UPL $85.01 +2.01 - Ultra Petroleum
A new 27 month high on nat gas helped keep the momentum on UPL. I am hoping their earnings will reinforce the metrics below.
This may seem like a strange play given my thoughts that gas prices could go down this summer. The reason UPL has been rising is the new cross country pipeline to their property in Utah. Once completed they will be able to sell their gas for more money with access to the eastern markets. Ultra is on a capex program to spend $755 million in 2008 to boost production by 18-22%. They pln to boost production another 25-30% in 2009 over 2008 levels. 2008 estimates are for 135-140 BCF. They produced 117 BCF in 2007. 2009 estimates are for 170-175 BCF. 2010 estimates are for 200-205 BCF. That would be nearly double their 2007 production.
Ultra Petroleum Corp. (Ultra) is an independent oil and gas company engaged in the development, production, operation, exploration and acquisition of oil and natural gas properties. The Companys operations are primarily in the Green River Basin of southwest Wyoming. The Company continually evaluates other opportunities for the acquisition, exploration and development of oil and natural gas properties. As of December 31, 2007, Ultra owns interests in approximately 121,652 gross (62,756 net) acres in Wyoming covering approximately 230 square miles. The Company owns an interest in approximately 676 gross producing wells in this area and is operator of approximately 50% of the 676 gross wells. The Company owns interests in 252,629 gross acres in Pennsylvania. On October 22, 2007, the Company sold Sino-American Energy Corporation (Sino-American), which owned its Bohai Bay assets in China.
Breakout trigger: $83 Hit 4/14
Position: 2009 $90 LEAP Call OZH-AR @ $9.40