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it sounds like Jim Beam, but rather than a nasty headache this stock will bring you outstanding returns

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September 24, 2008 – Comments (4) | RELATED TICKERS: FMC

 

I came across a stock this afternoon that I absolutely love and it doesn't have a CAPS rating yet.  I say that we change that.  The company that I am talking about is John Bean Technologies (JBT).  Yes, it sounds like Jim Beam, but rather than a nasty headache the next day (man I hate that stuff, I'm more of a Jack guy) John Bean should bring you a great return on your investment.

As I have said many times in the past, I love spin-offs, which historically significantly outperform the overall market on average.  BJT was recently spun-off from FMC Technologies (FMC

Now that it is free from FMC, BJT can plow its earnings into its own business rather than having them siphoned off by FMC to support rapid growth in its oil business.  I suspect that we sill see it make more acquisitions in than it has been in the future.

As people get busier, they tend to eat more processed foods.  This growth in the processed food segment will drive business towards JBT and its food processing machinery.  Furthermore, JBT's products increase food processor productivity.  It is crucial for food processors to be as efficient as possible in today's workd where large buyers like Wal-Mart are squeezing their margins.

In addition to food processing equipment, BJT produces fuel-saving products for the airplanes, such as power systems that reduce the amount of fuel that planes use when idling.  This is a nice niche at a time when the price of oil is so high...and likely headed higher.

JBT expects its earnings to increase by 21% this year.  Even if a global slowdown cuts into that figure, we're talking about a company that has a P/E ratio of less than 10. 

I wish that I had known about this company and had added it to my CAPS portfolio when it was trading at only $11/share, but it still is a steal at this level.

Deej

4 Comments – Post Your Own

#1) On September 24, 2008 at 2:34 PM, ocsurf (< 20) wrote:

I like the little to no debt....and I love me some processed foods.....need to take a look at management...

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#2) On September 26, 2008 at 1:26 PM, DemonDoug (79.27) wrote:

Deej, as always, I am posting on your most recent blog.

I just want to comment on a couple of past bullish picks, CBI and GE.

I told you before, and will say it again.  Imagine if SI owned Washington Mutual and CBS broadcasting.  That is basically what GE is.  A huge part of their market cap is their finance arm, and I would not be surprised for them to lose 50% of market cap from right now.  I would be willing to bet almost anything that they WILL cut their dividend, because anyone who thinks that dividend is safe is really just turning a blind eye to their financial division.

Regarding CBI.  I still think they may do well.  But I've seen it with too many companies, when management royally screws up a project, you just don't know what else they have that they may have screwed up.  I'm not sure what is going on with their earnings and business overall, I think it's possible the stock price may have over-corrected, but until I see some stabilization in their business, it will be hard for me to give a green thumb, much less put actual money into it.

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#3) On September 29, 2008 at 9:14 PM, TMFDeej (99.43) wrote:

Thanks for the comments, Doug.  Things are nuts right now.  I am best man in my brother's wedding this week, I have the worst case of the flu that I've had in a decade, and a two-week old baby that I have to stay far away from.  As you might suspect, I haven't had a lot of time for blogging this week, but I'll be back.

Deej

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#4) On October 12, 2008 at 8:56 PM, columbia1 wrote:

Can't wait to see what you have to say out the GM, ford talks. Hopefully you are feeling better by now :)

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