Chicago Bridge is undervalued

A global, engineering, procurement, and construction company that specializes in turnkey projects for customers that produce, process, store, and distribute the world's natural resources, the market hammered CBI as it became clear emerging economies, a key CBI customer, had entered a recession. But all of that is in the rear-view mirror now.

The approaching U.S./global economic recoveries, and their impact on oil/natural gas prices and production, is a major reason why institutional investors having been adding to their CBI positions. So should you, if you can tolerate moderate risk. The First Call FY2009/FY2010 EPS estimates for CBI are $1.72 to $1.50.

Stock Analysis: Chicago Bridge & Iron is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in CBI now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your CBI position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $3.

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