Dryships = Casino short term = Long term value
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Posted 2461 days ago on 4/28/10
DRYS will go UP
$1.79 on 7/28/10
$1.00 (-32.89% from time of market call)
Dryships is a great stock to own. The book value is 11 dollars and has been that way while the stock is sub 6,7 but the real catalyst that should push the stock up is the leasing out of 1 or 2 oil rigs in the next couple months. It may not happen, but with oil above 80, it is a done deal in the next year. The company is both an oil rig company and a shipping company. The oil rig company is worth around $5-$7, while the shipping company is worth around $3. The owner does not care to dilute the stock, so that is the only reason why I say it will only go up to 7.15 rather than $10 (which I think it will be within a year). I think that the underlying shipping fundamentals is improving as well, given the big increase in exm, and dsx. The time to buy is anytime below 6 where the latest common shareholder offer is.
With the market correction and greece, it will probably go down to 5.89 or even lower, so holding off a little bit to buy is also a good plan.
From a risk/reward perspective - it's around 3:1 to 4:1. The maximum downside is to $5. Maxiumum upside is to $7 and $10. It has always hit above $6.50 in 3 months because of the book value and speculation, and I see no reason why it won't this time around.