Buy Oshkosh, by gosh

Follow-on contracts are expected in the years ahead, which will push OSK's defense revenue to well over $5 billion in FY2010.

Further, although FY2009 revenue is likely to decline 20-25%, the street has looked past that to the likely double-digit revenue gain in FY2010 on the defense contract win; institutional investors have bid up shares accordingly, taking OSK up to about $20 from roughly $5 in a scant four months. The First Call FY2009/FY2010 EPS estimates for OSK are a loss of 49 cents to a profit of $1.49.

Hence, Oshkosh is overbought short-term, so I'm recommending a Buy of OSK on a pull-back to $17-19. Note: Keep in mind that shares may not pull-back to that level.

Other positives: continued signs of the U.S./global economic recoveries would provided an additional tailwind to OSK's commercial business, which includes basic trucks, earth movers, snow plows, concrete mixers, emergency rescue vehicles for airports, and ambulances.

Stock Analysis: Oshkosh is a moderate-risk stock. Consider buying a 50% position in OSK on a pull-back to $17-19; then buy another 25% in four months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your OSK position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $7.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.