Among the biggest winners in Wednesday’s early trading are Iridium Communications (Nasdaq: IRDM), Continental Air (NYSE: CAL), Halliburton (NYSE: HAL) and Isle of Capri (Nasdaq: ISLE).

Halliburton Leads an Energy Turnaround

Shares of Halliburton (NYSE: HAL) are up more than +9% today as investors start to wade back into the offshore oil and gas sector. Rival Baker Hughes (NYSE: BHI) and Schlumberger (NYSE: SLB) are rising in tandem, up +5% today, though Transocean (NYSE: RIG), with its still-to-be-determined liability, is not participating in the rally. We’ll have a full look at the whole group later in the day.

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Continental Leads Airline Stocks Higher

Every business likes to benefit from more customers and higher prices. That trend is clearly in evidence at Continental Airlines (NYSE: CAL). The company just reported that revenues are now rising at a +20% pace, signaling that the industry is finally benefiting from last year’s sharp capacity reductions. Shares of Continental are up nearly +10%, while many other carriers are up more than +5% in sympathy.

Results in the whole group are also expected to be bolstered by a recent drop in oil prices. We are entering the “goldilocks” phase of industry conditions where the economy is strong enough to sustain travel demand, but no so strong as to make fuel costs prohibitively expensive. And you can bet the industry will be slow to bring back all those mothballed planes parked in the desert. Rising demand and tight supply of airline seats are an unusual condition for the industry, and look set to last for the remainder of the year. Continental’s impending merger with United Airlines (Nasdaq: UAUA) should only strengthen the carrier’s competitive hand.

Action to Take –> Despite all those positives, investors should proceed cautiously with airlines like Continental that have a high degree of international exposure –especially in Europe. If the European economies weaken further from here, international price wars may be inevitable. It may be wiser to stock with domestic-focused carriers such as JetBlue (Nasdaq: JBLU), Southwest (NYSE: LUV) and U.S. Airways (NYSE: LCC).

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Casino Stocks Get a Nod

Maybe John Paulson’s big bet on Boyd Gaming (NYSE: BYD) will pay off. We questioned the wisdom of investing in the casino industry at a time when the industry was expanding capacity while traffic was slumping. But Isle of Capri Casinos (Nasdaq: ISLE) proves that cost cuts can boost profits even as they wait for consumers to return to the craps table. Although revenues in its fiscal fourth quarter fell around -6% from a year ago, expenses fell even faster, leading to a +55% jump in earnings before interest, tax, depreciation and amortization (EBITDA). Instead of an expected loss, Isle of Capri managed to eke out a $0.15 per share quarterly profit. And that revenue drop is still an improvement over prior quarter comparisons, indicating that the company may soon show revenue growth once again. The positive quarterly report is pushing shares of ISLE up +15% in Wednesday trading.

Although Isle of Capri still sits on more than $1 billion in debt, the company was able to get lenders to push out re-payment time frames. And unless the economy contracts from here, debt levels should steadily come down. The debt load had scared off investors, as shares traded down below four times projected EBITDA at their nadir. They still only trade at around 5.5 times projected fiscal (April) 2011 EBITDA, and as debt levels go down, that EBITDA multiple should expand.

Action to Take –> Despite today’s sharp upward move, shares should still move higher, back to the 52-week high of $14.40, as investors start to focus on best-case scenarios rather than worst case scenarios. Isle of Capri has quickly morphed from a potential bankruptcy candidate to an impressive cash flow generator.

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Iridium Keeps Absorbing Capital

More than a decade ago, Iridium Communications (Nasdaq: IRDM) was forced to declare bankruptcy after burning through several billion dollars. The company aimed to provide wireless phone service anywhere on the earth, but found that few people could afford the company’s extremely high prices. And with few customers it was hard to pay for all of the satellites that were launched.

Eventually, after shareholders were wiped out, Iridium managed to raise more money and eventually went public again (in 2008). These days, the company has around 350,000 subscribers, but that’s not yet enough to be profitable. To reach critical mass, Iridium will have to launch yet more satellites. To fund that effort, the company has lined up nearly $2 billion in fresh debt. The catch: the French government has offered to guarantee 95% of that debt, which means that the company should have no trouble finding investors for its bonds. That news is sending shares up more than +5% in Wednesday trading.

Action to Take –> Iridium will still be on the hook to re-pay that debt, and would need to double or triple its subscriber base to support that debt load. And it’s fair to wonder how many people can afford very expensive cell phone service for remote locations. This looks like just another round of spending that will fail to deliver. If you’re looking to short a stock in this market, today’s pop in the stock looks like a good entry point.