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Blowin' in the Wind Part 2: Fluor Corp.

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May 20, 2008 – Comments (3) | RELATED TICKERS: FLR

Yesterday I talked about how wind seems as though it is destined to be the next hot alternative energy sector and of the lack of pure wind plays on the U.S. exchanges (see post: the answer my friends is blowin in the wind).  I have found another "stealth" wind play, right in my own stock portfolio.  This stock isn't stealthy because it is a small, unknown company.  It is stealthy in that I, and I am sure many other people, was not aware that it was heavily involved in construction of wind farms.  The company is Fluor Corp. (FLR). 

I used the massive drop that most E&C companies experienced back in January to add a number of companies in this sector, mainly ones that are focused on energy, to my personal portfolio.  Specifically I bought full positions in Chicago Bridge & Iron (CBI) and Fluor Corp and a partial position in McDermott International (MDR) under the premise that the prices of oil and natural gas are so high right now that even if the United States goes into a recession energy companies will have tons of money to invest in building stuff.  Not to mention that these companies' businesses are well diversified globally and they have huge backlogs of projects already in their pipelines so to speak.

While perusing my portfolio the other day, I noticed some wind-related news about Fluor.  I guess that I knew about this project back when I purchased FLR, but I didn't pay much attention to it at the time.  It has popped back up on my radar.  In conjunction with Scottish & Southern Energy, Fluor Corp. and has been building the Greater Gabbard offshore wind farm in the United Kingdom.  When the project is completed in 2011 it will be the largest wind farm of its type in the world. Fluor has agreed to sell its 50% stake in the joint venture to SSE for about $80 million (see article: UK's 504-Megawatt Offshore Windfarm).  FLR will receive a one-time $0.50 per share gain in its second quarter earnings from the sale of its sake.

If that news wasn't windy enough for you, just last week Fluor signed a $1.8 billion contract to build another UK wind farm (see article: Fluor inks $1.8 bln contract for British wind farm).  Construction on this project is scheduled to begin in the summer of 2009.

Fluor was never cheap, even when I bought my position in it during the dip several months ago, but it does provide investors with a way to benefit from the newfound popularity of wind power.  If Flour becomes the go to company for the construction of wind farms it could end up making a ton of money from this trend.

An actual picture of the Greater Gabbard wind farm (pretty cool stuff, huh?)

Deej

Long FLR 

P.S. thanks to joeykid who reminded me that "Blowin' in the Wind" was originally recorded by Peter, Paul and Mary.

3 Comments – Post Your Own

#1) On May 20, 2008 at 2:22 PM, WillSurfForFood (80.02) wrote:

I really like the idea of these energy infrastructure related companies. It is an area I haven't given much thought to yet so thanks for the ideas.

 

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#2) On May 20, 2008 at 2:51 PM, wolfhounds (29.12) wrote:

Yo deej, love your post and comment on the stock price. But Peter, Paul and Mary covered Bob Dylan's original recording. It was one of his earliest songs with no electrical backup. Yes, I'm that old (LOL).

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#3) On May 20, 2008 at 4:02 PM, TMFDeej (99.27) wrote:

Ah ha, I knew it.  Thanks wolfhounds.  I was right.  Take that joeykid! :)

Deej

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