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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (38037)	5/26/2010 9:56:43 AM
From: E_K_S	Read Replies (3) \| Respond to of 78750

Hi Spekulatius - Foreign Infrastructure Companies - I am not too bullish on any companies that are in this sector especially if we go through a double dip recession. Many of these companies have sold off their recent highs and a case can be made that IF there is a second round of stimulus AND participate in a sub sector where there is growing demand then it might be time to nibble at a few shares. First - There was some discussion that Europe was talking about a new stimulus program. Second - Euro has fallen significantly relative to the dollar, so companies that present bids in "Euros" may have a competitive advantage to win the jobs. Third - Find companies with large backlog, a low debt profile and is a survivor in their niche. Your suggestion for ALO.PA (Alstom) may be a good one and seems to meet much of this criteria. If we ever get this super train out to bid in CA, they may be quite competitive in winning their bids. Hope there is not a "Buy American" provision in the RFP. The company I have my eye on is Chicago Bridge & Iron Company N.V. (CBI). finance.yahoo.com - They were recently bought by a NV from a private equity company in the 1990's. - Some of their work is bid in Euros thus can benefit from a weak (falling) Euro, - Expertise in designing & building LNG terminals, storage systems and related infrastructure. Anything NG should benefit from the recent drilling disaster in the Gulf of Mexico. - They have exposure to nuclear as they build the containment vessels. Anything requiring welding expertise they do( ie. LNG tanks, Pipes, refinery etc) - Backlog is the lowest of the three (FLR, Shaw, CBI) but still greater than 1. Their margins are good and at current price their forward PE is now around 8! - Debt profile not very good. Large amount of goodwill from their recent acquisitions. This may be a deal killer. The stock could still correct back to $10 if we visit the past lows but I may nibble at a few more shares on another 15% correction ($15.share-$16.00/share). I own a small position around $20/share. Check out all the recent projects they have won since 2000. Go to bottom of page and view their history. cbi.com The company has grown by consolidating from many smaller U.S. firms. Their are about 20% the size of FLR and 70% the size of SHAW. I like their niche in the LNG business. Finally, I would hedge with a buy/write strategy as their options get very large premiums (out 6 months > 20%). EKS

To: Spekulatius who wrote (38037)	5/27/2010 10:21:39 AM
From: Walter Bagehot	Respond to of 78750

Interesting pick - note the high return on equity as well. My one issue with the business is the erratic French government involvement. Would that limit me from buying, I don't know - I'll have to consider it further.

To: Spekulatius who wrote (38037)	6/6/2010 11:46:53 PM
From: Spekulatius	Respond to of 78750

re ALO.PA - the May 2010 shareholder letter is out: It gives a nice overview of the company and it's current condition, imo: Current issue: alstom.com Link to older shareholder letters: alstom.com They are sort of prediction shrinking earnings since they are giving a 7-8% target for the operating margin (currently 9%) and revenues will shrink due to reduced order backlog - but I think they are conservative at least with respect to the margin. They were conservative in the past and the lower Euro should help with the margin and with new contract wins in countries that are tried to the US$.