Global Industries (GLBL - $16.95) a Great Stock for the Summer

This stock is not exactly unkown, it has a little more then doubled in the past year. The stock also has 6 analysts covering it, so there is a fair amount of coverage on it as well. But the reason I think you should take interest in this stock is because what it did last summer. From June through September it went from $8 to $15. Global Industries provides marine services to the oil and gas industries. This includes platform installation and removal, diving services and pipeline construction. They have profited greatly over the past year not only from oil prices being higher but also from the hurricanes that hit the gulf coast last year. With hurricane season officially kicking off last week, the question is will hurricanes hit the gulf coast again this year?

Global industries operates in five geographic areas of the World with the Gulf Coast and Latin America areas making up over 60% of their revenues. In their most recent quarterly earnings release, revenue was up 80% from a year ago and income was up more then 100%. With that incredible growth, the stock is only trading at 14 times its expected 2007 earnings. There are some reason for concern, investors might have stayed away because they feel this type of growth can't be sustained without hurricanes hitting the area every year. Well, they stated in their earnings release that their orders backlog has doubled from a year ago to $660 million so there is no evidence of a slow down yet. As it stands now, they should have plenty of business to take them through a great year.

Now back to the question I posed at the beginning. Will a hurricane strike the gulf coast this year? Of course no one knows the answer to that question. And of course no one (At least I hope no one!) is wishing for a hurricane to come just to profit off of it. But if a hurricane does come this stock will benefit greatly from it just like it did last summer. If this stock traded at a very reasonable level of 25 times 2007 earnings it would be at $30. I would consider that a fair level for the stock by year end and if a hurricane comes this summer to the Gulf Coast, I expect a price over $30 by the end of the summer.