Imperial1964 (97.92)

Imperial1964's CAPS Blog

Notes: looking for bargains in industrial/heavy machinery

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August 27, 2008 – Comments (3) | RELATED TICKERS: BOLT , ASTE , CMI

As my post last night, I'm beginning some fresh research, looking for bargains. Basically, I'm looking for undervalued stocks and tonight I'm publishing my quick notes on some companies I have flagged as potential values in the industrial/heavy machinery sector.

HEES H&E Equipment Services
too high high debt:equity

PCP Precision Castparts
too high debt:equity

OSK Oskosh Truck
too high debt:equity.

DE John Deere
Woah! Debt/equity = 3

IR Ingersol Rand
debt:equity a little high for me--not that bad, I'm very picky.
declining earnings projected.

CMI Cummings
didn't grow net cash from operations last year.
balance sheet getting stronger over time.

ASTE Astec Industries
high short interest
large ramp in inventories (20%), but about in-line with ramp in earnings. I suspect this is due to an increase in new orders, not declining sales.

BOLT Bolt Technology
Strong balance sheet, Ever increasing earnings.

I would consider further research on the last three. I looked closely at CMI last year too but didn't buy, and yet again it looks like I found a company I like more. ASTE also looks very tempting, but I'm going to delve further into BOLT. It's dependent on undersea oil exploration. By the numbers it looks great, plus it is one of TMFEldrehad's favorite pick.

I'm just writing what I find as I'm looking into things. I'll delve into 10-Qs and such details on individual companies later, but I'm going to finish narrowing it down to about 5 companies first. Tomorrow night will probably be on tech.

3 Comments – Post Your Own

#1) On August 28, 2008 at 8:44 AM, TMFSinchiruna (62.81) wrote:

Wow.. I'm impressed that a list could grow that long without including Caterpillar, Terex, Bucy, and Joy Global. Personally, I would start with those four, as they have a massive moat built in with their huge sales backlogs in place. You'll find Fool articles from me aplenty on the latter three, and coverage on CAT from my colleague David Smith. Fool on!

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#2) On August 28, 2008 at 12:15 PM, Imperial1964 (97.92) wrote:

Thanks! I completely forgot to look at CAT (duh!). The others I'm not familiar with, but I'm certainly going to look into them and see if they fit my strategy.

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#3) On September 02, 2008 at 5:41 PM, Imperial1964 (97.92) wrote:

CAT has too high debt:equity ratio. I'm picky in that regard, especially right now.

BUCY has too high a price to earnings.

So does JOYG.

I'm no longer a mining bull as you are. I think mining equipment companies have farther to fall. Of course, BOLT is dependent on offshore oil drilling and oil will likely fall farther in my opinion.

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