Joy Global: Back up the truck

Posted Oct 6th 2009 5:00PM by Joseph Lazzaro
Filed under: Stocks to Buy

When the global economic expansion hits take-off stage, it will most likely be led by emerging market nations, who are building-out their infrastructure networks and using more energy on a per capita basis, yearly. And that's good news for mining equipment companies, which is why I'm Reiterating my Buy rating for Joy Global (NASDAQ: JOYG), first recommended on June 15, 2009 at a price of $38.05.

If you bought manufacturer and servicer of mining equipment company Joy Global then, you're up about 26%. If you didn't, this may be the last time to establish a position and earn an outsized gain with JOYG during this economic cycle.

Here's another pertinent positive: more than half of JOYG's revenue is international-based.

Technically, Joy Global's stock chart looks beautiful: a strong uptrend, with only minor, corrective pull-backs, and a stock price that's almost always above the 50-day moving average – the latter of which indicates institutional investors are continuing to add to their JOYG positions. The stock has tested the psychologically-significant $50 level, and will likely encounter resistance there, but after mounting it, the $50 level will serve as support.

Stock Analysis: Joy Global is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in JOYG 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 JOYG position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $22.

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

Tags: Joy Global, JOYG