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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (10657)	5/26/2000 11:48:00 PM
From: James Clarke	Read Replies (1) of 78920

I would be very careful with FMO because of the balance sheet. I have looked at this many times, and just can't understand the earnings power because of all the deals. It could be a double, but there is no margin of safety with so much debt, so it could also be a zero. I wouldn't short it, but I also wouldn't buy it. Trinity (TRN), on the other hand, is also a cyclical with earnings on the way down but with a stellar balance sheet. I think this will be a double for a patient holder with limited downside from here. If you look at the stock chart, would you ever guess that railcar orders have been UP sequentially in each of the last three quarters? I think trough earnings for the stock are in the $2.50-$3.10 range. With the stock trading at 23 and this balance sheet, they don't get much better than that.

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