I like Terex (TEX), a construction equipment manufacturer. TEX was beaten down after guiding analysts downward for FY00 earnings. Basically, FY00 earnings were guided downward because management felt analysts were using too low a tax rate, as NOL credits expired, and one division's sales were soft.
The stock got hammered as analysts lowered their estimates, but look at the ratios! Trailing P/E is only 2.15 and FY00 P/E is only 3.8! This P/E of 3.8 is in line with the guidance given by management, so the sell-off is way overblown. This stock is worth $30+ IMHO, not the present $12-13.
The present management team took a company whose balance sheet was a wreck, turned it around, and made a series of good acquisitions. There is still a fair amount of debt on the balance sheet, and management says it will pay down $200 million in debt this year and buy back 2 million shares out of their strong cash flow. I also think there will be somewhat of a pause in the string of acquisitions, while the new acquisitions are digested, and also grown.
If you like this one, buy before earnings are out on 4/26. Management can't buy any shares back right now, and they are sure to buy more after earnings are released. I think the earnings should be pretty good. |
