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Gold/Mining/Energy : PRUDENTIAL STEEL (tse:PTS)
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To: Robert who wrote (23)4/1/1998 11:26:00 PM
From: Well-Informed  Read Replies (1) of 69
 
Prudential Steel is a first class company and investment.
Unfortunately, I believe many investors see "steel" in the name
and value it more as a steel company. Even before the multiple
contraction in late 1997 for oil services companies, PTS
traded at a discount to other companies. The fact is, PTS does
not make steel - it purchases it and manufactures oil services
tubing and some industrial tubing. Lower steel prices mean
higher profit margins. Take a look at their last annual report
and notice the steady decline in their costs in making their
product.

Based on analysts' current P/E targets for oil services companies,
PTS has a 1 year target of $22-25 by Peter's & Co., RBC Dominion
Securities, and Midland Walwyn. If the industry continues to
see more activity in mergers and acquisitions, the P/E for the
group could expand.

This company has a consistent record of reporting higher sales
and earnings than analysts have expected. It has recently
increased its capacity at its Calgary Mill and it is currently
working on a mill in Washington State to supply the growing
gas exploration in the Rockies.

This stock has completed a double bottom, with the MACD and On
Balance Volume indicating there is institutional interest in
this stock. Its current break above $16 indicates that the stock
could move quickly into the $18-$20 range.

Let's not forget that U.S. companies such as Maverick Tubing (MAVK) and LoneStar (LSS) could be interested in acquiring PTS to get
a foot hold into the Western Canadian Oil and Gas exploration.
Never count out Ipsco Steel which focuses on large diameter
pipeline tubing.

Stay Tuned.
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