Tenaris S.A. (ADR) (TS)

GS751 (92.35) Submitted: 6/12/08 11:43 PM : Start Price: $64.72 TS Score: 1.18

Part of my Global Macro Thesis. In real life buying equities based on this thesis is strictly for the long term. Many of the companies that support my GMT are very reasonably priced. TS is one of them. With current prices there has been a surge in global Oil and Gas Infrastructure prices, TS has made some acquisitions to set themselves up for this.

Pass Line
higher margins because more of its sales come from premium-price seamless tubes.
Debt Situation will allow it consider more acquisitions.
The Rocca family controls 61% of Tenaris' outstanding stock.
Global Scale will help to offset regional dips in demand.

Don't Pass Line
If think we are in a crude oil bubble.
Needs Acquisitions to drive growth.
South America = political risk
Products are somewhat easy to duplicate, needs a better long term competitive advantage.

    Stock   Industry   S&P 500     Stock's 5Yr Average*
Price/Earnings    19.1    16.6    18.9    13.0
Price/Book    7.0    3.2    4.0    3.8
Price/Sales    4.8    1.0    2.8    2.4
Price/Cash Flow    20.5    12.2    12.7

Note that you are paying a premium for this stock.

   

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