Welcome back to another edition of Friday Focus, where we apply Structural Valuation Analysis (SVA) to stocks worth a closer look. This week, I’m examining Transocean (ticker: RIG)—a company once trading at lofty heights, but which today sits deep in the “blue zone.”

From $190 to $3.64: What Happened to RIG?
Back in 2007, Transocean’s stock soared as high as $190. Fast-forward to today, and it’s trading under $4. The decline wasn’t sudden—it was a long erosion. Business fundamentals deteriorated, balance sheet strength weakened, and the stock cascaded into what I call the blue zone.

The Blue Zone Rule
When a stock enters the blue zone, my advice has always been the same: run, don’t walk, with your pink ticket. Sell first and ask questions later, because what you’ll often uncover isn’t pretty. For Transocean, this proved true. Its balance sheet continued to deteriorate year after year, and the stock never truly recovered to its former glory.

Volatility = Opportunity
But here’s the twist. Stocks in the blue zone, like Transocean, are incredibly volatile. These names often move 50–100% in a single day. For nimble traders, that volatility creates extraordinary opportunities. Take RIG for example:

• It fell from $7.17 to $1.16 in just days.
• Then spiked to $3.75 almost immediately.
• Later collapsed to $0.84… before running to $5.43 not long after.

If you had the courage and agility to trade those swings, there were fortunes to be made. But make no mistake: this is trading, not investing. The fundamentals continue to work against you.

A Note From My Book
In my book Inside the Market, I include a chapter called Putting the Tech into Technical Analysis, where I discuss strategies for identifying and managing trades like these. Blue zone stocks are not for the faint of heart—but for those who understand the risks and timing, they can offer remarkable opportunities.

The Big Takeaway
Transocean is a fascinating case study. While it offers some of the wildest trading setups, the underlying fundamentals remain poor. Approach with caution: treat it as a trading vehicle, not an investment.

Next Week’s Preview
Join me next week as we take a closer look at one gold stock and one silver stock, and tackle the question: which metal looks stronger right now? Personally, I like both, but one may hold an edge. Stay tuned.

Watch Ross' review on Youtube by clicking here.