MDU Resources Group, Inc. (MDU)

phonixed (91.73) Submitted: 2/10/08 9:35 PM : Start Price: $25.74 MDU Score: 15.06

In a market environment that is as volatile as the one that we're in, it's good to find a company that doesn't seem levered to aggregate market trends. Whether you think that we're in a recession, heading toward one, or nowhere near one, MDU is a solid pick all-around.

I first explored the stock with some concern; it's generic classification as a building materials/industrial goods company caused some unrest. But, just in reading company profiles, this pick is just as diversified as a good portfolio. And it's management, according to its CGQ, is better than 84% of S&P 400 Midcap companies. With the turbulence around securities, it's always good to know that you can trust in management. This just lead me further into my choice.

This stock is a rock-solid choice (some level of a pun intended). It's pulling out a rather safe ROE of 13.95%, boasting revenue in the mid-4 billions. Year-over-year, its growth was just over 12%. MDU is also showing room to grow through an industry-low P/E of just under 11 in a sub-sector whose average is just over 15. It may not look like a lot, but when you're looking for a stock that has any upsides, positive growth numbers and margins like 13.11 % (Operating Margin) over an industry standard 8.04%, just feeds the pro-MDU fire. Their Profit Margins are also steady, sitting at 10.17%. I like the look of these figures, showing me some value yet to be had. Using the high estimates for the year, this stock could be well into the 30's, and beat a down-trending market.

But, I also need to play the cautious CAPS investor. What about this stock really concerns me? It's .5 Debt/Equity ratio. Plain and simple, I like clean balance sheets; especially in the case that they're holding debt in a tightening credit market. I know that the company's numbers show that they're good for it, but you can never be too safe while surmising on possible securities outcomes. Even good companies are getting punished now. It's holding debt in the low billions, and it's been an up-and-down pattern with their liabilities, but I think that MDU is a winner, and can keep going strong well into the next few years.

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