Look for Fluor's shares to fly in 2010

Posted Oct 20th 2009 2:20PM by Joseph Lazzaro
Filed under: Stocks to Buy

I'm Reiterating my Buy rating for Fluor Corporation (NYSE: FLR), first recommended on February 17, 2009 at a price of $39.21.

Fluor is a leading international design, engineering, and contracting firm with projects that include designing and building manufacturing facilities, refineries, pharmaceutical facilities, health care buildings, power plants and telecommunications and transportation infrastructure.

The value-story remains the same with Fluor: look for high-single-digit to double-digit revenue growth in 2009 and 2010 with FLR, on U.S. fiscal stimulus package-related infrastructure work, and as oil/gas and electric power companies resume their long-term capital projects.

The First Call FY2009/FY2010 EPS estimates for FLR are $3.86 to $3.58; Note: that $3.58 FY2010 forecast will likely prove to be very conservative.

Technically, Fluor's stock has retreated from highs near $59 this summer, but view the pull-back as a constructive correction and a Buy opportunity: earlier this year, FLR had sprinted to $50 from lows around $30 in March.

Stock Analysis: Fluor Corporation is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in FLR now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your FLR position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $23.

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

Tags: FLR, Fluor Corporation