WESCO International (WCC): Electrical and industrial products for big business

Posted Oct 4th 2007 2:24PM by Larry Schutts
Filed under: Analyst Upgrades and Downgrades, Good news, ConAgra Foods (CAG), Tyson Foods'A' (TSN), Technical Analysis, Goodyear Tire and Rubber (GT), Stocks to Buy

When they are in the market for electrical and industrial construction products and MRO supplies, many of the biggest firms around go to an outfit that represents some 29,000 suppliers and offers more than a million products. It serves about 110,000 customers worldwide.

WESCO International (NYSE: WCC) is a leading distributor of electrical construction products and electrical/industrial maintenance, repair and operating (MRO) supplies. The firm operates seven automated distribution centers and approximately 400 full-service branches around the world. Clients include ConAgra Foods (NYSE: CAG), Goodyear Tire & Rubber (NYSE: GT) and Tyson Foods (NYSE: TSN).

The company pleased investors last week, when it announced that it had completed a $400 million stock repurchase program and had authorized a new program for the same amount. CIBC World Markets and Bank of America Securities subsequently initiated coverage of the stock with "buy" ratings. The stock popped on the news and has since moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the stock with four "strong buys," seven "buys" and three "holds." Analysts see a 15% growth rate, through the next year. The WCC P/E ratio (10.42), PEG ratio (0.77), Price to Sales ratio (0.36), Price to Book ratio (3.68), Price to Cash Flow ratio (7.78), Price to Free Cash Flow ratio (7.79), Return on Investment (17.23%) and Return on Equity (37.94%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 95% of the outstanding shares. Over the past 52 weeks, the stock has traded between $37.65 and $71.10. A stop-loss of $38.90 looks good here. Note that the firm is expected to announce Q3 results on October 18, before the open.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

Tags: flag, fundamental analysis, FundamentalAnalysis, momentum, technical analysis, TechnicalAnalysis, WCC, WESCO International, WescoInternational