Friedman Industries Inc. (FRD)
I am adding this one to my watch list. They have no debt, pay a 4.4% dividend and have a forward PE of 8.04. Those sounds like pretty attractive value numbers. ROE at 14% is ok too. They have a small division that builds tubular well pipe from their flat rolled steel product. Stock is near it's highs so, I have it on my watch list and on a 10% correction, this one might be an attractive value buy. The company produces ERW (Electric Resistance Welded) STEEL PIPE - Steel pipe for use in the water well industry, steel building columns, steel pipe piling, water and air lines, metal fabrication, fencing, road bore, culverts, sign posts and other structural applications. Steel used for the farm or ranch (well & irrigation pipe, fencing, culverts) also fits my AG theme.
I will do a bit more research on more local producers as well pipe demand is specific to the shale region (FRD is located in Texas) and the closer the manufacturer the lower the transportation costs. I am not too interested in any of the foreign suppliers at this time.
I sold my GGB in March 2011 around $13.40/share and noticed that it has fallen back down to $8.85/share. My previous buy was 3/2009 @ $5.37/share. This one is attractive to me as they supply steel for use in Brazil and the development of their infrastructure and offshore oil fields. I may begin to nibble at another starter position on any sell off down to $6.50/share.
The important consideration for me on this cycle is to look at those niche suppliers/producers that have little or no debt. I want them to cater to a growing local market but are a small enough player where such a niche market is large enough for the company to grow. FRD fits this mold (it may be too small). GGB is a bit too large a company unless you can get it a a significant discount. They also carry a bit more debt than I would like.
EKS |
