Diamond Offshore Drilling: Preparing For A Recovery - Diamond Offshore Drilling Inc. (NYSE:DO)

Diamond Offshore Drilling (DO) looks like an attractive buy at current levels as its share price trades at historically low levels, while the underlying fundamental environment is improving. Its share price has been decimated in recent years due to the global financial crisis weighing on global growth, as well as the oil price decline from 2014-2016. Management sees a potential turnaround in its fundamental operations, and it has gained further flexibility by bolstering its balance sheet. I am buying stock in the name as a potential long-term value play.

Price Action

Its share price has largely collapsed since the financial crisis. This is due to both a slowdown in global trade and growth, as well as the 2014-2016 collapse in oil prices. Offshore drilling is a cyclical business, which can weigh on the company's fundamental operations during periods of weakness. With DO trading near historic lows now however, it looks like an interesting value play.

Management is seeing signs of recovery in dayrates, and a turnaround in demand for offshore drilling. Over the last few months, the $16.5 price level on its chart had acted as strong resistance. Over the last week this resistance was broken, and it looks as if the stock has upside momentum alongside a recovery in the price of oil. I am buying stock in the name as its share price momentum looks to be accompanied by strengthening fundamentals, while it trades at historically depressed levels.

Fundamental Narrative

DO looks attractive a....

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