DryShips hits an iceberg

Not exactly sure what happened to DryShips Inc. (DRYS) today. Perhaps investors were spooked from what Motley Fool writer Rich Smith wrote yesterday;
"while the dry bulk shipping industry is booming, I fail to see why a single player within this industry -- DryShips -- should enjoy a valuation more than 50% higher than its nearest rival, and more than twice that of some of the ships giving more distant chase. Sure, it gets the best margins of the bunch, but that just raises more flags. Reviewing DryShips' results, we see that much of its profit over the past year was derived from gains on the sale of assets. Meanwhile, the firm's cash flow statements don't show this supposedly wildly profitable firm generating any cash profits since its IPO. On the contrary, over the last year, the firm has burned through nearly $500 million in free cash flow, as its long-term debt ballooned from $418 million to $728 million. Somewhere, this corporate ship has sprung a leak.
If DryShips can't generate free cash flow on sky-high margins, I shudder to think what will happen when those profit margins splash back down to sea level. And you should to -- because this is the scariest stock in the world."
Investors certainly jumped ship today.

GPRO

Gen-Probe Incorporated (GPRO) had been chugging right along through the messy correction lately. It has a 5+% short interest and Q2 earnings are released today Aug.1st after hours which could be the straw that breaks the camel's 20-day EMA based on how investors have been treating favorable and unfavorable earnings reports alike.
inserts via investors.com & StockScouter

What Correction?

Plenty of hurt goin' around. But there are some stocks out there that aren't even aware of the sell-off going on around them. Case in point - Ceragon Networks Ltd. (CRNT). Since it broke out of it's base (April 30th) the stock has appreciated 83% and corrected no more than 9% (June 6 -13 8.8% correction). Currently CRNT has a 1.9% short interest.





































inserts from investors.com & StockScouter

Let's Jamba!

I go to JambaJuice maybe a handful of times in a month. Yesterday, as I was waiting for my wheatgrass juice to be made (I know, I know, it's not exactly a "refreshing" juice, but it's really good for you) I was thinking how every time I come to this joint it's always packed, and always turning over the packed house (as one customer leaves, two seem to come in the door). So, I down the shot of wheatgrass, chase it with a complimentary orange wedge (the citrus helps the body absorb the calcium inherent in the wheatgrass; looks to me like this operation knows what it's doing), and off I go. My very observant fiance says to me as we leave; "did you notice the flyer with the JMBA ticker?" So, I put two and two together (always crowded business + Nasdaq ticker symbol = potential $$$). Lo-and-behold this article surfaces today at seekingalpha.com. "On June 11th Jamba announced earnings for the first quarter of 2007 of $11.9 million or 20 cents per share versus a year ago loss of $81.5 million or -$3.88 per share. Although these first quarter results included a pre-tax gain of $15.2 million, after backing out this gain the results still handily beat analyst expectations. Revenues increased 22% year over year coming in at $89.4 million." Not only a fantastic earnings turn-around, but the summer is settling in, and I expect JambaJuice to be just as crowded next time I go in for a shot of grass. Long Jamba.

Bubble Pressures

Asia's richest man yesterday warned of a bubble in China's stock market, a sentiment also echoed by the People's Bank of China Governor. "China's government increased the amount its currency can appreciate, raised interest rates and curbed bank loans in an effort to tame a runaway economy and ease trade tensions with the U.S. and Europe." Though seen as some by merely a move to please tough-guy Treasury Secretary Henry Paulson before his visit/meeting next week. Starting Monday it will allow the yuan to rise or fall by a whopping 0.5% against the dollar each day, compared to a 0.3 percent margin previously. Not enough for Congress though, which has been threatening trade restrictions on China forever, trying to get the yuan to trade with less restraint. Many believe that China's artificially low currency value makes American manufacturers unable to compete with a rising flood of cheap imported Chinese consumer goods. While others (such as Zhou Xiao-chuan, governor of the People’s Bank of China) see their pace on Yuan valuation as acceptable. In a Wall Street Journal article he has said: “We don’t accept the concept of currency manipulation. It’s not a clearly defined economic concept.”
The CSI 300 Index of stocks has soared 85% this year.
"The government can't just sit there and do nothing as deposits leave the banking system,'' said Dong Tao, chief Asia economist at Credit Suisse Group in Hong Kong. "If the hike can slow money flows into the stock market, that could provide less ammunition for speculators.''
"This is the single biggest move yet on the part of the Chinese government to calm the stock market and address fundamental problems in its economy,'' said Tomo Kinoshita, chief economist for Asia ex-Japan at Nomura International Hong Kong Ltd. "The signal is unmistakable: the government wants to stop the stock market exuberance and stem excess liquidity.''
"The nation's trade surplus, which ballooned 74 percent last year to a record $177.5 billion, drove the country's foreign- exchange reserves to an all-time-high of $1.2 trillion, making it difficult for the government to slow growth."
"China's economy expanded 11.1 percent in the three months ended March 31, exceeding 10 percent for a fifth quarter."

Water, Water Everywhere...

....and not a drop to drink (eventually). While three-quarters of the Earth's surface is water, less than 1% (0.37% to be exact) of that water is drinkable. It is forecasted by the year 2025 that two thirds of the world population will be without safe drinking water and basic sanitation services.
- 95% of the fresh water in the U.S. is underground. One-Fifth of U.S. irrigated land is fed from the Ogallala aquifer, which stretches from Texas to South Dakota. "It is being depleted at a rate of 12 billion cubic meters per year, amounting to a total depletion to date of a volume equal to the annual flow of 18 Colorado Rivers. Some estimates say it will dry up in as little as 25 years."
-The Middle East has only 1% of the world's available fresh water, which is shared among 5% of the world's population. The number of water-scarce countries in the Middle East and North Africa has risen from 3 in 1955, to 11 by 1990. Another 7 are anticipated to join the list by 2025.
-China has 20% of the world’s population but only 7% of water global resources. More than half of their 660 cities suffer from water shortages. 90% of cities’ groundwater and 75% of rivers and lakes are polluted. 30 cubic kilometers more water is being pumped to the surface each year by farmers than is replaced by rainfall. Also, the lower reaches of the Yellow River, which feeds China's most important farming region, run dry for at least 200 days every year.

So, with that said; Being that (drinkable) water is such a finite resource (I can just see it now, $67/barrel of water offered on the CBOT) Water infrastructure should hold big opportunity for investors. "In just a year and a half, PowerShares Water Resources (PHO) has become the flagship of the provider's 86 offerings" with $1.7 billion in assets. Claymore Securities and First Trust Advisors this week launched the Claymore S&P Global Water Index (CGW) and First Trust ISE Water Index (FIW). Also, check out some top water stocks and "Freakonomics Clean Water Holdings."