Recovery Play: Cal Dive Intl
Right after our Florida office was butchered by Hurricane Katrina, we advised readers to buy Cal Dive International (CDIS): Cal Dive Intl (CDIS) salvage areas in the Gulf. CDIS holds contracts with pipeline owners such as the Royal Dutch, BP and Williams Cos and takes care of all their sub-sea construction needs. The post-Ivan scramble handed the company's marine contracting division a fourth-quarter windfall and left it with months' worth of backlogged, deferred projects. Cash flow is healing and debt levels are falling. Cal Dive should have a lot on its hands for the next year.Shares have climbed from $62 to $66 since our recommendation.
Our logic was the following: the hurricane season was brutal and damage to the Gulf would mean boatloads of contracts for CDIS.
The call has paid off thus far; we're reiterating our buy on CDIS.
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