When a private company decides that it needs more capital for whatever reason, it may decide that the best way to raise this capital is through selling stock. This process of going public and selling shares is called an IPO or initial public offering. When an investor buys shares of stock that are being sold in an IPO the money that he spends buying the shares goes directly to the company which then can use it to fuel growth. In return for this capital contribution the investor is given partial ownership of the company. If a company issues 10,000 shares of stock in its IPO and you buy 1,000 shares of it, then you have a 10% ownership in the corporation. As an owner you are entitled to part of the corporation’s earnings, which are usually paid out by the company to its shareholders through dividends. Typically a company will only pay a portion of the earnings as dividends and then reinvests the rest to help the company grow. Most of the time you do not buy stock directly from the company but instead you buy it from another shareholder who for whatever reason has decided to sell his/her share of the company. Stocks are bought and sold on stock exchanges which help to bring buyers and sellers together. Stocks have a market value attached to them which is the price that it can be bought or sold for at that time. The market value of a stock is controlled by the laws of supply and demand. If demand goes up and more people what ownership in the company then an investor will be able to sell his shares at a higher price.
To me this stock looks incredibly cheap. first of all it has beat earnings expectations for the last 8 quarters except for Q3 of 2007. Its growth rate, while expected to slow is still incredibly high especially for the price that it is selling at. its price to earnings ratio is 4.94 which is very good. most companies with slow/no growth have p/e ratios under 10 but this company has a p/e under 10 even though it can still be considered a growth stock. this is reflected in another metric called the peg ratio or price/earning/growth ratio. RIG has a peg ratio of .22 which is the lowest in its industry suggesting that it is a good value. The company also has a very solid balance sheet and operates in an industry that is unlikely to take a serious hit even if the world does slide into a recession. As long as oil stays roughly were it is now or goes higher then the demand for oil rigs should go up. Currently oil is priced for a pretty major worldwide recession and I do not see it getting nea
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