GrafTech International Ltd. (GTI)

People can get all excited about peripheral issues, but given that this stock's ROIC using Buffett's calculation for Owner Earnings is -31.3%, Owner Earnings Yield of -15.9%, with debt of around $700 million on TTM operating income of $99 million. Adding $5 to the bottom line after payment of the SEC fines are complete doesn't change this reality. Where's their demostrated profitability? Where's their competitive advantage?

GTI seems inexpensive with a PEG value of 0.6036, below the Electronic Instr. & Controls industry median PEG of 0.94, which is supported by a PE of 6.0362 that is also below the industry median of 11.99. GTI is one of the more profitable companies in the Electronic Instr. & Controls industry with a net margin of 17.42%. Its operating margin and net margin are among the strongest of any peer while its gross margin is above the industry median. GTI is consistently one of the most efficient companies in the Electronic Instr. & Controls industry. With a Return on Assets, Revenues Per Employee, and Return on Equity of 21.21%, $412,056.60, and 53.36% respectively, they are among the most effective companies in the industry. GTI's debt to total capital ratio, at 13.47%, is in-line with the Electronic Instr. & Controls industry's norm. The company's Quick ratio has a value of 0.6 which shows that there are not enough liquid assets to satisfy current liabilities in the event that operating earnings are unable to.

In addition to the above info courtesy of TDAmeritrades research features, I also utilize Fibonacci retracement along with PSAR, MFI and MACD and volume to gauge when and by how much a stock will "rebound" or "retrace". IMHO GTI looks like it hit its bottom at 3.55 on 11/20/08 from it's peak of 27.98 on 7/2/08, is slowly rebounding. The first Fib point (33%) in my "rough calculations" is 11.69, which it is close to reaching at this point. Would have loved to have caught this one around 4 - 4.5, still plenty of room for a nice profit in the long term even at 50% retracement of 15.77, although 68% retracement of 20.16 would be even nicer. Only thing that I wish I could have with this pick is enough liquid assets to cover it's current liabilities.

Just a new approach to picks I am trying out.

will buy at some point with real $ this week... but throwing out these picks this sunday... the worst june since the great depression? sounds like the time to buy if you still have cash...

it doesn't take much research to know that this thing can and will run big time over the next few years....

from a technical standpoint it has broken out at the beginning of May and since I already own an oil and a fertilizer, this is my 3rd commodity play

9 fools rated 99.80 or better (top 122 fools) rate this a green thumb with no red thumbs... but here is the best part.... 5 of those 9 green thumbed in the last 90 days....

GTI is in the steel alloy group... this group has been in the top 10 performing industries (out of 192) in 7 of the last 52 weeks... we are entering into a new quarter and I think we will rotate into new leadership

In the first quarter 0f 2008, leadership was contained to fertilzer, steel basic, petro US royalty, transport rail, machinery automation, mining gold/silver, and building residential

In the second quarter of 2008, leadership was contained to fertilzer, steel basic, petro mach & equip, petro US royalty, transport rail, metal producers/distributors, petro drilling, energy coal, petro field services, and aero def & elec

notice only 4 of the leaders in Q1 were in Q2... this is why I picked a petro oil int'l integrated and now a steel alloy

Decades-old firm. Smallcap stock. Only 2 analysts.
Increasing margins
rising ASP
tighter capacity in mkt
single-digit PE. P/S ~ 0.5.

leverage falling from over 4x to 3.0x.

Sales up double-digits % [but growth slowing]
EBITDA up and growing nicely
Demand for key product line growing substantially
Prices increasing from +6 to +18 to +36% next year
room for further price hikes
New non-traditional markets becoming interested
Large firms like Dell and Samsung prefer their products
Sales of new product growing 1000% in two years
No new entrants.

I'm sure there are plenty of good company stories out there. Those of you who can't find a good stock to buy these days probably aren't looking hard enough. Here's one that looks good. But it's in a commodity-type industry, so nobody really cares. So I am taking some down here.

Naj

"pick and shovel" type of business selling required equipment for electric arc furnaces, solar, transportation industries. Strange thing going on here, they seem to be using earnings to pay down debt. I guess they have to make money to do that. One more outperform.

You should take a long position on Graftech to benefit from the market’s shortsighted view of steel manufacturing, industrialization, and a misunderstanding of Graftech’s potential contribution to alternative energy production.

Graftech will meet the needs of world industrialization: Due to higher marginal utility of capital and population growth patterns, emerging markets will industrialize in the mid-to long run. Industrialization requires steel. Steel production takes place in Electric Arc Furnaces (EAFs) that must continually use great amounts of graphite electrodes to regulate heat and electric flow. These electrodes deplete and must be replaced. Graphtech has an 80 country-wide electrode distribution network, the expertise, and the productive capacity to dominate in growing markets. Using current spot prices for Graphite Electrodes combined with

Graftech’s annual manufacturing capacity of 220,000 metric tons, Graftech could feasibly double its 2008 revenue with no capacity constraints that would lower its 27% operating margins.

Graftech has internationally diversified revenue streams: Graftech does not get more than 10% of its operating revenue from any one country. It has 20% of the total world market share, and established distribution networks and intellectual property that prohibit competition. The company has little credit exposure, and its diverse revenue streams shield it from exchange and interest rate risk.

Graphtech will dominate multiple worst case scenarios: Trading at $12.22, down over $15 from its 52 week peak of $27.21 a share, Graftech is priced assuming that it will not capture new markets, and that durable demand will be permanently impaired. The belief that steel production will remain stagnant is extremely short-sighted because delayed capital overhauls and industrialization together must eventually cause steel production to surge above previous 8% annual growth levels. Graftech’s international presence will allow it to supply the steel producers that profit from the inevitable industrial overhaul. Additionally,
Graftech’s polysilicon production, ingot processing, and high temperature processing knowledge provide necessary heat control for both solar and nuclear technology.

Graftech’s financial, strategic, and operational positioning minimizes its risk while exposing it to huge upside potential.

Graphite electrode demand is primarily linked with the global production of steel in an electric arc furnace ("EAF") and, to a lesser extent, with the total production of steel and certain other metals.

I've watched this stock for more than three years and have found it to perform well on a consistent basis with dips around the Feb to March time frame. The technology that they work with regarding fuel cells and their majority control in it makes for an interesting corporation in the times of high gas prices and green thinking.

its in my portfolio dont you know.

Mechel OAO, an open joint stock company, through its subsidiaries, operates as a mining and steel company. The company engages in the production and sale of coking and steam coal concentrate, steam coal, iron ore concentrate, and ferronickel

GTI has just finished paying off antitrust fines issued from the Dept of Justice. These payments (last one of $5.1 million) have weighed heavily on the eps, which should see an increase just from this relief. There is new competition for electrodes from India and China but GTI has a pretty solid book at least for 2007. Add in the $2 Million grant for fuel cell development and you have two reasons to like it.

Great buy and hold stock. As soon as R&D picks back up, this stock will soar with developments and improvements such as carbon nanotubes.

Tracking my portfollio:

01/28/2009 Buy 200.0000 GTI GRAFTECH INTERNATIONAL Details $9.09000 -$1,826.95 $8.95

01/28/2009 Sell 2.0000 GTICB CALL GRAFTECH INTERNATIO$10 EXP 03/21/09 Details $0.74000 $146.49 $1.50

In a good position when manufacturing picks back up. May take until mid or late 09.

See pitch by devoish.

oldvolvoguy pick

Infrastructure play with good valuations - go Obama go!

Infrastructure building in the USA and internationally will propel this stock forward.

Beats earning estimates, should see a good pop with anything closely resembling a market upswing.