These 2 Things Could Give DryShips 33% Upside

Jun. 9, 2014 9:23 AM ET | About: DryShips Inc. (DRYS), Includes: ORIG by: Quoth the Raven

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Summary

  • DryShips has been clipped      20% in the last three months.
  • Ocean Rig, majority owned      by DryShips, recently signed a significant drilling contract for 2015.
  • I continue to swear that      shipping rates cannot stay this low forever, and the Baltic Dry Index      continues to make a fool out of me.
  • Ocean Rig's contract,      combined with shipping rates eventually recovering (I swear it'll happen),      could drive DRYS to $4, representing 33% upside.

When I think about dry shipping, I think about the five Russian River Pliney the Elder IPAs I had last night before I went to bed. IPA beers are so hoppy and delicious because the English used a overcharged amount of hops to preserve the beer during its journey through traditional shipping routes to places like India.

So, thank god for traditional shipping routes.

Having said that, I wanted to take a short moment about DryShips (DRYS), and why I think the company that uses traditional dry shipping routes could be poised for a 33% upside by the end of this year. In my last article about DryShips, I claimed that the company could be getting ready to see a short-term boost in its share price.