Chicago Bridge & Iron: Back up the truck

As expected, institutional investors (IIs) have looked right past CBI's FY2009 decline in revenue to better days and quarters in FY2010: widening margins, and a rebound in the U.S. refining and Canadian oil sands segments, all amid strong Middle East orders.

The above outlook is a major reason why IIs have been incrementally adding to their positions since spring, and that's produced a beautiful stock chart, from a technical standpoint: a staircase. Missed out on the $7.31 entry? Don't fret: CBI is headed much higher.

The First Call FY2009/FY2010 EPS estimates for CBI are $1.70 to $1.59. That $1.59 FY2010 estimate will likely prove to be very low.

Finally, the Sell/Stop Loss has been raised to $6.75, or to just under cost, from $3.

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 one month, 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 December 2009. Revised Sell/Stop Loss if you bought shares in this company: $6.75.

- -

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