KBR, Inc. (NYSE:KBR)

You gotta love the most diabolically, cartoonishly evil corporation in the world for its money making abilities. Like an octopus it has it's had many arms entangled in the US government ever since the days of LBJ. It works both parties, it causes wars to break out just so it can profit, it uses low wage foreign workers to do dangerous shoddy work and shacks them up in despicable conditions next to the well paid American workers, it electrocutes US soldiers with showers, poisons them with chromium gas, destroys the environment with open burn pits, gang rapes female employees, buys off Presidents, Senators and Judges and gets away with it all with a slap on the wrist and MORE CONTRACTS.

USA! KBR! USA! KBR! GOD BLESS AMERICA!!! I personally own KBR in my real money portfolio and am constantly afraid I'll be struck by lightning in Karmic retribution...

Global Construction play

Not a lot of competition for what they do.

I am not sure why KBR, Inc. is on sale for just 1.38 times book value and 0.25 times sales. Historical price to book value ratios for this company have usually exceeded 2. The average price to sales ratio is 0.43 for the past three years. The company has a diverse base of customers including international and national oil and gas companies, independent refiners, petrochemical producers, fertilizer producers, and domestic and foreign governments. The backlog is solid. Expected 12/10 earnings are $1.67 per share. I am not sure why the company showed losses in 2004, but average return on equity is 13% from 2005 forward. The company has $1.1 billion in net cash, which amounts to $6.30 cents per share. Subtracting net cash from the current share price leaves an adjusted share price of $13.70, which is just eight times expected 2010 earnings. In addition, the company sports a 1% dividend yield. This stock is a safe holding with substantial upside.

CAPS=4S
DFA6M= -8.58%

Re-selected. Revisit October 2010

Joel Greenblatt Pick

good backlog, no debt, good cash position

The company may be easy for the media/chattering class to hate, but most of that is because of its singular focus on making money. Just look at the balance sheet. With no end in sight in Afghanistan and domestic infra structure just waiting to be built up, should be a great play on the post-recession.

Evil elements:
KBR is a private company that provides military support services. Notorious for its questionable bookkeeping, dishonest billing practices with US taxpayer dollars and no-bid contracts, KBR has violated human rights on the U.S. dollar.

KBR’s dubious accounting in Iraq came to light in December 2003 when Pentagon auditors questioned possible overcharges for imported gasoline. In June 2005, a previously secret Pentagon audit criticized $1.4 billion in “questioned” and “unsupported” expenditures. In 2002 the company paid $2 million to settle a Justice Department lawsuit that accused KBR of inflating contract prices at Fort Ord, California.

Many third-country national (TCN) laborers have been hired by KBR to “rebuild” Iraq. Generally hailing from impoverished Asian countries, they have unexpectedly become part of the largest civilian workforce ever hired in support of a U.S. war. Once abroad, the workers find themselves with few protections and uncertain legal status. TCNs often sleep in crowded trailers and wait outside in scorching heat for food rations. Many lack adequate medical care and put in hard labor seven days a week, 10 hours or more a day.

PEG = 1.26

Look at how much cash they have. Oh, and how much debt they don't. something tells me that's probably a good position to be in for the future.

fair value~~$39.16

MFI Pick

The pitch for this stock can be found on the MF The Stinky Feet discussion board at
http://boards.fool.com/Message.asp?mid=27410303&sort=threaded

Stop by and let us know what you think of this pick.

Zero debt puts KBR at a huge advantage for M&A, contract bidding, and cost controls

Tied to shotty electrical workmanship in US Afghanistan military bases. This is all over the news, and it is going to hurt them in the market.

Seems like momentum is for outperform. Good scope of skills for infrastructure stimulus plans.

KBR still rules in major US Government overseas contracts to build/operate camps. And, they continue to whip once mighty DynCorp's butt on big jobs like LOGCAP. Biggest competitor at moment is PAE, though Lockheed may be looking to sell off PAE which wasn't in Lockheed's range of core competencies anyhow. KBR's major problem, according to credible hall way gossip, is danger of kick backs to foreign governments, and its less than sterling contract execution.