
TSE:FTT
This is a bet on an improving economy even with reduced revenue growth. Still have very strong margins expanding between 9%-10% between now and 2013. Trading at around 6.2X EV to EBITDA compared to their peers at around 8X. This stock has pretty much moved lockstep with copper so if you think China is going to come back a little bit and that US is getting more constructive and that copper is going to do a little bit better, this will probably follow as well.
Good business and all of the markets they operate in are performing well and have growth opportunities. Bug Finning has had a number of challenges and it has nothing to do with CAT equipment, but more to do with their operations. Revenues are growing and backlog is up 6% so it is doing well but investors are focusing on the cost line. If they can get them under control then investors will reward them with north of $30 for the stock price. Prefers to Caterpillar.
Not us as cheap as it was a few months ago but still trading below its five-year average. Revenue growth is slowing but will still do about 5% revenue growth in 2013, 7% for 2014. When you combine that with expanding margins for the next 3 years, you get a really big number, a boost in their EPS by about 65%. If you believe in the global growth and China story, it’s a good one to be buying. Buy on a pull back.