In June, I blogged about TRC Companies Inc. (NYSE: TRR) and said, even at its 52-week high, the stock was a buy. TRC is even more of a buy now -- a big hedge fund had to dump its shares as a result of a margin call on its entire portfolio (and subsequently shut down the fund). This hedge fund's loss now becomes our gain. TRC is one of my favorite picks right now, and it has become a better value since my first blog. In three words: Infrastructure, infrastructure, infrastructure. The company's expertise lies in engineering, construction, remediation services, risk management, and pollution control, and its clients are the big guns: government agencies, hospitals, banks, industrial properties and the likes. TRC has been known, additionally, for buying, and redeveloping, environmentally-contaminated real estate properties.
To give you an example of its scale and the type of work TRC secures, the company was chosen as Long Island Railroad's system-wide manager for Hazard Analysis, part of its commuter and worker safety efforts. TRC also recently secured a task order contract for the Port of Los Angeles. As the recent, tragic bridge collapse in Minnesota highlights, there's a growing infrastructure problem in this country and it isn't going away. The U.S. government in the next decade will dedicate more than $1.3 trillion of upgrades necessary to improve its infrastructure.
When I blogged about this company in June, TRC was trading at $14.20. I said then that the company was just beginning its three-year, costly turnaround strategy focused on improving the company's systems. Its plan should pay off by 2009. Since my earlier blog, market forces (especially this hedge fund that was a huge shareholder) have pushed TRC down to $10.90. This is a stock that I think can hit $30 in the next several years, and the general downturn of the market has made it a true bargain. I enthusiastically call it a buy.
Type of Stock: A player in infrastructure and engineering, TRC seems under investor's radar right now, and this is bound to change. I'm very bullish on TRC.
Price Target: TRC (the symbol is TRR) is a stock that has been hit in the downturn of the market, and it is a bargain at $10.90. I've maintained that we could see this hit the $30s within two years, and I hold strong on this.
Note: I own shares in TRC.
Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.
Type of Stock: A player in infrastructure and engineering, TRC seems under investor's radar right now, and this is bound to change. I'm very bullish on TRC.
Price Target: TRC (the symbol is TRR) is a stock that has been hit in the downturn of the market, and it is a bargain at $10.90. I've maintained that we could see this hit the $30s within two years, and I hold strong on this.
Note: I own shares in TRC.
Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.
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Reader Comments (Page 1 of 1)
9-06-2007 @ 12:55AM
NETHUGO said...
As a former insider, I believed most of what you state. I chose to leave because I came to the realization that things were not going to get better any time soon.
From an investor's perspective, I suspect one does not care about day to day operations of a firm too much. We focus on revenue, EPS, market cap., etc; though any failings or successes in day to day operations would translate into impacts in earnings or losses.
The reality however is this; the company is hanging by a thin thread with very little borrowing power and thus little or no operating capital. It has strained relations with its vendors as it has become very late to pay. It takes 6 weeks on average to reimburse employees and they are experiencing an incredible amount of turnover across the country at all levels of the organization.
A good attempt to fix its financial accounting systems was botched by trying to do it all at once. In doing so, they created a nightmare whereby not everyone was trained in time and some of the new systems did not work properly or were not ready for showtime. This caused a couple of month delay in billing. For a service company trying to improve on a below par DSO means cerain death.
Another observation I had is that not much thought has gone into the hiring or promoting of senior management. Some of the decisions I witnessed would cause most to dump this stock immediately.
I have friends who still work and wish them the best. For their sake, I hope things improve beyond appearances to attract investors.
HG