Oshkosh Corporation (NYSE:OSK)

axemanarthur (< 20) Submitted: 7/28/2011 10:51:16 PM

Recs: 1

I believe your comment sums up why Osk is such a good buy. Two reasons: 1. The military will be cutting spending, I agree, but not so much on Osk vehicles which are the back bone of the military, the "MRAP" is now the standard for the military. The military will be phasing out the Humvee, It must since the Humvee has been proven inneffective in battle and now the enemy knows how to defeat it. Thus you cannot send your troops out in a death trap...This is what happened to the Army Jeep before the Humvee's existance. Also, The Humvee has been around for 30 years, and its time is past. Also, OSK makes FMTV's, this is not some prototype missile system that costs billions of dollars and has no guarantee that it works, this is a truck. Simple. The army needs these for everything.
2. My second reason that you post presents a good reason to buy, is that you represent the consensus of people who people believe that OSK is only defense. This is just plain wrong, OSK currently has market share of all areas of the economy that are beaten down right now, they own Mcneilus, Jerrdan, London cement, JLG, Pierce. If you consider that the US Market is 40% of its average for municipal purchases, and also that cities can only postpone a new firetruck for...not that long, it is not something you just "go without" fire apparatus budgets are the Last to be cut, I know as my pay raises were frozen but we still have a brand new engine at my fire station.
If your investing approach is to "BUY HIGH SELL LOW" than your comment makes sense, however, being someone who has been in combat in Afghan and Iraq, and having used their product, along with being a full time fireman and knowing that Pierce and Mcneilus is what my city buys and what the mechanics love. Add to this the fact that all of these high quality companies are not even taken into account by investors who only see the defense element, this makes OSK a true value. A value trap would be RIMM, whose product is becoming obselete. Can you say the same for refuse trucks, fire trucks, and army transport trucks?

Jeffrey2012 (44.15) Submitted: 8/7/2011 8:23:27 AM

Recs: 0

First of all, let me say thanks for serving. It's always great to meet a fellow veteran on these boards.

Now onto the real meat. I do not dispute that their vehicles are superb and that they are necessary. In fact, I was considering purchasing this years ago. But the problem here is that it will continue to go lower. Military spending is going to be contracting and there is no way OSK is going to escape the axe. Also, since you were in the army, you should know about the plans they have to be innovating in having cost savings. Through recycling programs, they will be able to refurbish existing vehicles into as brand new. I'm not sure when they will implement it in other programs, but that is a very real risk.

Also, do you pay attention to the news? State, county, and local governments are severely contracting with the downturn were having. There is no way OSK is going to escape the municipalities cuts either. Your argument that they are well diversified and will buffer them from the feds is off because diversifying from one belt tightening customer (military) into another belt tightening customer (municipalities) is a recipe for weathering the downturn? I fail to see the logic on that. And I can assure you fire trucks can be delayed: it's called repairing.

I don't dispute they are useful vehicles. I am disputing their growth because belt tightening is going to hit them hard. Also, with retarded Icahn trying to conjure up shareholder value, they may very well face significant danger going forward. How much do you wanna bet his idea of shareholder value is to load up the balance sheet to the hilt and buy shares back? The economy is getting worse and for capital sensitive purchases, they are the first ones to go. While the company may not go under, that is a serious possibility if Icahn gets his way in destroying another American company.

axemanarthur (< 20) Submitted: 8/7/2011 6:01:02 PM

Recs: 0

Thanks for your reply, I appreciate a good argument and your points do hold logic. The municipalities ARE tightening their budgets, as I already stated my pay has been frozen for nearly two years and I know many other cities are are trying to find creative ways in order to reduce their deficits as well. I agree that the military likes to refurbish their existing vehicles, and is exactly what they are doing currently with the humvee. However, I have a reply to both your arguments...
1. While municipalities may be belt tightening, they can only do so much to repair an aging fire apparatus or refuse truck, as stated in OSK conference call municipalities have been doing this for years now and are "40% off their spending average" for fire purchases and refuse. Fire trucks are not the first thing cut, it is the employee benefits that eat up the budget not one time purchases like a fire engine. This is why a city would rather purchase a shiny fire truck than give its members a raise since the tax payers/voters can see this shiny truck and see their tax dollars being put to use. This goes the same with refuse trucks, which are essential to a cities function, remember when new york had that blizzard this last winter and the trash trucks stopped going out for one day? There was practically a riot. Fire and refuse are essential to a city performing its duty, and while this may be a short term slow down, I believe we are at or near the bottom of this and when cities start to improve they will be purchasing these much needed vehicles first, and these will be a priority for these cities. To conclude this point, I believe you are right in that osk will be a short term loser in terms of its share price, but in the longer term this company is primed with market leading products in multiple markets. and although all of these markets are beat down right now I see them recovering.

2. Your argument is that Osk is obsolete military wise due to the Gov refurbishing existing vehicles, however, Osk is one of the companies contracted to do just that, so they only benefit from this. Also, the gov is only doing this refurb as a temporary fix to a bigger problem, The humvee is 1970s tech and has reached the end of its lifespan. What other vehicles has the military used for 30+ years? The one vehicle that the military does use in both peace and wartimes is the truck, which is a simple, cheap and not in danger of becoming obsolete as we will always need to transport troops/supplies, This is a vehicle that Osk already supplies.
Another point I want to make is that a 3 billion dollar contract (current FMTV contract) that results in almost 2600 vehicles that are used in peace and war time is much less likely to draw the attention of congress when there are 3 billion dollar contracts that yield no vehicles and are only for researching a special missile system that is not even gauranteed to work. THOSE contractors need to be worried. Osk has a pretty stable business in boring, cheap, and effective products they have supplied the military for many years.

My third and final point is that Osk has had double digit growth in its access sales, which they have said are not due to new purchases but due to replacement purchases. I believe Access equipment is a segment of low growth. Contractors will REPAIr and delay a new purchase for as long as possible, however in proof of my point about fire trucks...you can only do this for so long before you need a new apparatus. A access rig is not a life or death piece of epuipment and yet this segment is seeing huge growth just through replacement orders, what will happen therefore when US cities need fire trucks?

As for Icahn, I have not done my research on him, and hold no opinion on him, I am merely stating what I have learned about OSK and only osk as a company. Icahn, as you say, may be a detrimate to this company, but I believe fundamentally this company is good to go.