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Non-Tech : The SHAW Group
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To: Greg h2o who wrote (218)2/2/1998 12:24:00 PM
From: Greg h2o  Read Replies (1) of 291
 
Hoake Breedlove report dtd 2/2/98

THE SHAW GROUP INC. (SGR - $21 15/16) February 2, 1998
Update Report Rating: STRONG BUY
David Yuschak, CFA, 972-960-4867 Target Price $32
ú ú Worldwide demand for infrastructure building will remain strong over the next several years despite
the problems in the Far East. A continued economic slowdown will further increase the backlog of
projects required to meet future demand.
ú ú The recent pickup in orders from Taiwan and China for SGR piping systems, in the face of the Far
East financial crisis, demonstrates the underlying demand for power. Solid demand for power in the
face of economic crisis can only lead to strong demand when the financial crisis subsides.
ú ú The Shaw Group's acquisition of Prospect Industries adds extra dimension to the company's long
term growth, particularly in Europe.
ú ú SGR's strategy of acquiring companies and operating assets creates a low cost and a vertical
integration that is impressive. The Company's disciplined approach to expansion has made the
company an effective international competitor.
ú ú SGR's acquisition of Cojafex "locks in" the company's technological leadership in pipe bending and
significantly expands its fabrication capacity.
ú ú Selling at less than 12x 1998 earnings, less than 2 times book value, and less than 0.6x market
capitalization to sales, SGR's common stock is substantially undervalued. These discounts to the
market give us confidence in our $32 price target and STRONG BUY rating.
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