Re: Brain/Brawn Last Mile Play (WATR)
Thread,
Here's some info regarding one of the companies, Tetra Tech(sym:WATR) I have mentioned in a few previous posts.
MikeM(From Florida)
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Hey, Can There Be a 'Safe' Takeover Play?
NEW YORK, June 3, 1999 (JagNotes.com)–- The thrill of owning shares of a company that stands an excellent chance of being taken over would excite any investor. The trick, though, is to buy such a stock and not get butchered if there's no deal. Investment advisor Charles LaLoggia offers what he regards as "a safe takeover play": Tetra Tech. How does he figure it's safe? Because of the company's powerful fundamentals, LaLoggia says, and the fact it operates in three hot takeover industries: water utility services, wastewater management and telecommunications.
In all three areas, Tetra Tech provides consulting engineering, construction and management services in a wide variety of projects. Given what he regards as the company's strong fundamental prospects, LaLoggia sees the stock—excluding any deal—surging over the next 12 months to 30, a gain of nearly 43%.
No, it's not a case of getting inside information. Rather, it's a solid research focus on smaller companies in industries that are experiencing a lot of takeover activity, and companies that Wall Street analysts are essentially ignoring. "It seems to be getting easier to do this than it was ten years ago because Wall Street research is so geared to the big-cap stocks," he says.
LaLoggia figures that Tetra Tech, in a buyout, should fetch between $35 and $40 a share, or about $1 billion. Minus a buyout, LaLoggia is gung-ho on the company as "a significant growth story." Since its public offering in 1991, earnings of this 34-year-old company have grown at a blistering compounded annual rate of 36.4%. And above-average growth is what LaLoggia sees over the next couple of years. His estimates call for earnings of 90 cents a share this year, versus 71 cents last year, and on to $1.20 in 2000.
Currently, telecommunications projects account for about 18% of the company's revenues. Annual worldwide capital investments in telecommunications infrastructure are projected to be $200 billion in both 1999 and 2000. Given its position as the largest contracting and engineering firm in cable voice and video transmission and its expertise in digital wireless infrastructure, Tetra Tech should capture a rising share of the market.
The company hopes to make this segment about a third of its overall revenues in about three years. Last year's total company revenues ran nearly $300 million. "Deal or no deal, this is a stock to own," concludes LaLoggia.
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