This gigantic beat also serves to remind us of the big dichotomy. You are either in the energy and petroleum products game or you are in a lot of games that don't work.
It's not easy for these companies, some of which have lived off the duress of state and local governments, including Shaw (NYSE: SGR) (Cramer's Take) and to a certain extent Aecom (NYSE: ACM) (Cramer's Take) and URS (NYSE: URS) (Cramer's Take), to become oil-and-gas plays.
The only ones that have transcended it beside Fluor are Foster Wheeler (NASDAQ: FWLT) (Cramer's Take) and Jacobs Engineering (NYSE: JEC) (Cramer's Take), and the only reason you would really know that is longevity. I remember in the early 1980s when FLR and then FWC would compete directly for all of the huge projects after the second oil shock.
MOST NOTEWORTHY: Fluor, Forward Air and McDermott were today's noteworthy upgrades:
Citigroup upgraded shares of Fluor (NYSE: FLR) to Buy from Hold to reflect the company's strong performance and backlog in Q4 and raised their target to $190.50 from $158.
Baird upgraded Forward Air (NASDAQ: FWRD) to Outperform from Neutral citing near-term growth initiatives that are gaining traction.
Citigroup also upgraded shares of McDermott (NYSE: MDR) to Buy from Hold to reflect the company's strong Q4 performance and rising commodity prices.
Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the above in mind, Fluor is worth a review.
Fluor Corporation (NYSE: FLR) is one of the world's largest engineering, procurement, construction and maintenance companies. The company oversees construction projects for a large range of industrial sectors worldwide, primarily in its core strengths: designing and building manufacturing facilities, refineries, pharmaceutical facilities, healthcare buildings, power plants, and telecommunications and transportation infrastructure.
Analysts see 20-25% revenue growth for F2008, after likely 15-18% revenue growth in F2007, driven by strong demand for oil and natural gas projects.
BorgWarner (NYSE: BWA) to give business update at 10am.
Burger King (NYSE: BKC) to report Q1 earnings; conference call at 10am.
Tuesday, November 6
Merrill Lynch to host conference call discussing Focus Media's (NASDAQ: FMCN) secondary offering at 11am.
Yahoo (NASDAQ: YHOO) CEO Jerry Yang, Senior VP Michael Callahan & General Counsel to testify before the House Foreign Affairs Committee on how their company gave false information to Congress relating to their role in a human rights case in China which resulted in a journalist being sent to jail for 10 years.
MOST NOTEWORTHY: Starbucks Corporation, Brinker, Healthways and Fluor were today's noteworthy downgrades:
Banc of America downgraded Starbucks Corporation (NASDAQ: SBUX) to Sell from Neutral, and lowered their target to $23 from $27, as they see downside risk to estimates due to slower growth. The firm is concerned that expectations for a near-term recovery are too high.
Goldman downgraded Brinker International (NYSE: EAT) to Sell from Neutral citing macro economic pressure on sales.
Credit Suisse downgraded Healthways Inc (NASDAQ: HWAY) to Neutral from Outperform on valuation.
Fluor Corporation (NYSE: FLR) was downgraded to Hold from Buy at Morgan Joseph on valuation.
MOST NOTEWORTHY: Intel (INTC), European investment banks, American Express (AXP), and ImClone (IMCL) were today's noteworthy downgrades:
Intel Corporation (NASDAQ: INTC) was downgraded to Neutral from Buy at Merrill Lynch, which cited valuation.
European investment banks were downgraded by Societe Generale on concerns that investment banking revenue will decline. Deutsche Bank AG (NYSE: DB) was downgraded to Sell from Hold. Credit Suisse Group (NYSE: CS) was downgraded to Sell from Buy, and UBS AG (NYSE: UBS) was downgraded to Hold from Buy.
American Express Company (NYSE: AXP) was downgraded to Neutral from Buy by Merrill Lynch, which cited slower consumer spending.
ImClone Systems Incorporated (NASDAQ: IMCL) was downgraded to Market Perform from Outperform at Friedman Billings, which lowered their estimates following feedback regarding the FLEX study announcement.
He explains, "Investor confidence remains the primary issue. We deal in a world of paper. That paper has value only because, at the basis, there is a promise to pay by someone who is trustworthy and has the capability of performing as promised."
Now, he adds, "We are worried that many people with subprime loans may not be able to meet their promise to pay, and that failure ripples through the financial system."
But Frishberg sees this weakness as an opportunity. He suggests, "Volatile markets function to transfer assets from the hands of weak holders into the hands of strong holders. When the transfer is complete, selling pressure will decline because the strong holders are less inclined to sell, and we will be in position for a new rally. It is not always orderly or polite, but that is just the way the cycle works."
He advises, "We want to be in the best companies that are leveraged to the inevitable growth of the overseas middleclass, and we took advantage of what we think is a low risk entry point to buy them at reasonable levels."
Representing these "best in class" companies, he suggests using the current period of market volatility to build positions in Goldman Sachs, Apple and Fluor.
Each day, Steven Halpern's TheStockAdvisors.com features the latest investment ideas and market commentary from the financial newsletter community.
MOST NOTEWORTHY: Tenet Healthcare Corp (THC), Furniture Brands International, Inc (FBN), Sepracor Inc (SEPR), ValueClick, Inc (VCLK) and Altria Group, Inc (MO) were today's noteworthy downgrades:
Bear Stearns downgraded shares of Tenet Healthcare (NYSE: THC) to Underperform from Peer Peform citing difficulties in California and weak margins.
Stifel downgraded Furniture Brands (NYSE: FBN) to Sell from Hold citing concerns regarding continued weakness in the housing industry.
Summer Street downgraded Sepracor (NASDAQ: SEPR) to Sell from Neutral after the HCPCS website indicated Xopenex and Albuterol will have the same code as of July 1.The firm believes this eliminates the optimistic scenarios that Sepracor can garner a minimal-or-no-reimbursement cut.
RBC downgraded shares of ValueClick (NASDAQ: VCLK) to Underperform from Sector Perform as the firm believes the FTC letter poses a risk to earnings and that the company is unlikely to be acquired.
Matrix downgraded Altria Group (NYSE: MO) to Buy from Strong Buy to reflect decreasing cigarette sales and increasing valuation...
OTHER DOWNGRADES:
American Technology cut Autodesk, Inc (NASDAQ: ADSK) to Neutral from Buy.
Matrix downgraded Fluor Corp (NYSE: FLR) to Sell from Buy.
Fall earnings are winding down, but there were still a number of notable companies reporting this week.
Excellent
AES Corporation (NYSE:AES) 27c per share vs analyst expectations of 21c - at $22.45 (yesterday's close) the stock is up 42% year-to-date and is near its 52-week high of $22.66.
American International Group (NYSE:AIG) $1.53 vs $1.42 - AIG is only now returning to its levels from the beginning of the year with just over a 2% return YTD. The stock is up more than 2.5% today.
Fluor Corporation (NYSE:FLR) 31c vs (12c) - while FLR is up more than 20% in the past year, its YTD return is only 8% and at $83.39 is trading within its 52-week range of $68.70-$103.85
JC Penney (JCP) $1.26 vs. $1.23 - JCP had an amazing run. YTD return is nearly 45%. The stock is up another 1.3% today to $80.61, very near its 52-week high of $81.40 set yesterday during the session.
On the Fence
El Paso Corporation (NYSE:EP) 16c vs 16c
Watson Pharmaceutical (NYSE:WPI) 33c vs 34c
Walt Disney Company (NYSE:DIS) 36c vs 34c
Awful
Federated Department Stores (NYSE:FD) 20c vs 25c
IMAX Corporation (NASDAQ:IMAX) (30c) vs 5c
Lions Gate Entertainment Corp. (NYSE:LGF) (14c) vs (2c)
Earnings review from Tedd Cohen of TheFlyOnTheWall.com (subscription required).
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