It's now or never, from a return on equity standpoint, with Cameron International Corporation (CAM), first recommended on April 24, 2009, at a price of $25.59. If you bought in April, you're up about 60%. I'm reiterating my buy rating, but there are qualifications.
Look for Cameron to continue to benefit from longer-term demand for oilfield capital equipment and deepwater support equipment, on likely, ramping oil demand in the immediate years ahead.
Still, the run-up this year following the irrational sell-off has been pronounced: Cameron traded at about $17 in March. Hence, they'll probably be some short-term and year-end profit-takers that will weigh on shares through December: that's the preferred Buy time to establish/add to a position. The First Call FY2009/FY2010 EPS estimates for CAM are $2.30 to $2.11.
Technically, Cameron's stock chart is strong -- an uptrend, with only minor encounters with the key, 50-day moving average. A recent pull-back from the $42 range represents a Buy opportunity, and as noted, there may be another in December. Finally, given a likely $65 to $70 economic expansion top for CAM, it's important to underscore that this is undoubtedly the last chance to establish position in the stock an earn an outsized gain in this economic cycle. Finally, the sell/stop loss has been raised to $18 from $12.
Stock Analysis: Cameron International Corp. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in CAM 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 CAM position before December 2009. Revised sell/stop loss if you bought shares in this company: $18.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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