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Page 2 of 2 from Targeting Takeovers
Missy Sullivan, 03.12.02, 12:00 PM ET
You say that most cyclical stocks that could benefit from an economic recovery are at fairly ridiculous price-to-earnings ratios right now. Where have you found the bargains?
The one I'm really intrigued with right now is ASV Inc., which makes track-driven, all-terrain vehicles used in construction, agricultural, landscaping and military markets. The vehicles are marketed by Caterpillar, which itself has become a hotly recommended stock of late, and which owns a whopping 57% stake in ASV Inc. They are jointly developing several new vehicles, three of which will begin production this year. ASV Inc.'s recent earnings report was right on target and it's projecting to earn 30 cents to 38 cents [per share] this year. Here's a company whose products are marketed by Caterpillar, and they've been jointly developing several innovative new products. And over the last couple of years, Caterpillar has been paying over twice the current market price for ASV Inc. stock, which now hovers around $11. I love situations like this. You've got an outside shareholder in the same industry that not only owns a big chunk of the stock, but paid much higher prices for it. And their fortunes are intertwined. You very often see takeovers in situations like this. In a few years, we'll look back and say it was so obvious.
forbes.com
Are we talking about the same ASV? |
