The world's largest maker of farm equipment is due to report earnings on February 18 and the outlook is generally bleak. All of the major drivers behind Deere's (NYSE: DE) formidable business appear to be headed into a tailspin. Global agricultural commodity prices have come down significantly from peaks in 2007 and 2008, leaving farmers with less money to spend.industrials posts
FeedJohn Deere: How bumpy a ride?
The world's largest maker of farm equipment is due to report earnings on February 18 and the outlook is generally bleak. All of the major drivers behind Deere's (NYSE: DE) formidable business appear to be headed into a tailspin. Global agricultural commodity prices have come down significantly from peaks in 2007 and 2008, leaving farmers with less money to spend.Eaton (ETN) stock drops 8% on good news
Diversified industrial manufacturer Eaton Corporation (NYSE: ETN) posted some great numbers for 2Q 2008. Investors responded by pushing the stock down 8% as a result. Go figure. With the exception of its automotive segment, which saw a modest 2% decline in sales, all other divisions posted double digit sales increases with demand remaining strong going forward. 2Q sales increased 32%, net income increased 35%, while net income on a per share basis increased 24% The company posted these results despite the fact that oil prices increased 40% during the quarter.
The FAA recently awarded a $40 million contract for power quality equipment. The company's Hydraulic Launch Assist technology performed very well in tests on trash trucks. It reduced fuel costs by 25% and significantly reduced brake service costs. With diesel prices showing no signs of decline, demand for this technology will be very strong when it becomes commercially available in late 2008. CEO Alexander Cutter forecasts FY sales growth to be 3% in the U.S. and 5% internationally. FY operating EPS are forecast to grow 12-16%, resulting in EPS of $7.70-$8.00. At this rate of return, the stock is currently bargain-priced around $73.00
The FAA recently awarded a $40 million contract for power quality equipment. The company's Hydraulic Launch Assist technology performed very well in tests on trash trucks. It reduced fuel costs by 25% and significantly reduced brake service costs. With diesel prices showing no signs of decline, demand for this technology will be very strong when it becomes commercially available in late 2008. CEO Alexander Cutter forecasts FY sales growth to be 3% in the U.S. and 5% internationally. FY operating EPS are forecast to grow 12-16%, resulting in EPS of $7.70-$8.00. At this rate of return, the stock is currently bargain-priced around $73.00
Woodward Governor: Because defense wins in Super Bowls and on Wall Street
When the market acts like an erratic fish, go with the known. Think established companies. In industrial sectors. Something, as my cigar-smoking Uncle Nick used to say, "as strong as the New York Giants' defensive front four." (And in case one hasn't noticed lately, the defensive front four of the Giants, favorite football team of yours truly, is still pretty good.)
With the above in mind Woodward Governor is worth a review. Woodward Governor Company (Nasdaq: WGOV) designs, manufactures, and services energy control systems, components for aircraft/industrial engines, turbines, and other power equipment.
Analysts like WGOV's recently-completed restructuring, which is bearing fruit and shows signs of improving Woodward's already solid position in its control systems business.
With the above in mind Woodward Governor is worth a review. Woodward Governor Company (Nasdaq: WGOV) designs, manufactures, and services energy control systems, components for aircraft/industrial engines, turbines, and other power equipment.
Analysts like WGOV's recently-completed restructuring, which is bearing fruit and shows signs of improving Woodward's already solid position in its control systems business.
Continue reading Woodward Governor: Because defense wins in Super Bowls and on Wall Street
Olin Corp. has it covered, from bleach to bullets
Given the market's continued choppy / consolidating pattern, it makes sense to add a defensive stock or two, and one worth an evaluation is conglomerate Olin Corp.
Olin Corp. (NYSE: OLN) is a diversified producer of brass metal products, chlor-alkali chemicals, and ammunition.
Analysts like Olin's chlor-alkali business (21% of 2006 revenue), including products like caustic soda and chlorine, among others. An impressive brass operation (67% of 2006 revenue), and an ammunition business (12% of revenue) rounds-out OLN's diverse industrial plate. Look for the ammunition business to continue to benefit from strong military orders, in the immediate years ahead. The Reuters F2007/F2008 EPS consensus estimates for OLN are $1.50/$1.46.
The drawbacks? The commodity chemicals segment is cyclical -- some products are used in pulp/paper processing and to keep swimming pool water clean, for example -- so analysts will look for signs of a slower-economy-induced dip in orders in Q1/Q2 2008.
The First Call mean rating for OLN is: Buy. [7 firms.] Mean 2008 target: $24.00. [high: $27, low: $20.]
Stock Analysis: Olin Corp. is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from OLN's shares. Sell / Stop Loss if you were to purchase shares in this company: $13.
DISCLOSURE: Joseph Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
Olin Corp. (NYSE: OLN) is a diversified producer of brass metal products, chlor-alkali chemicals, and ammunition.
Analysts like Olin's chlor-alkali business (21% of 2006 revenue), including products like caustic soda and chlorine, among others. An impressive brass operation (67% of 2006 revenue), and an ammunition business (12% of revenue) rounds-out OLN's diverse industrial plate. Look for the ammunition business to continue to benefit from strong military orders, in the immediate years ahead. The Reuters F2007/F2008 EPS consensus estimates for OLN are $1.50/$1.46.
The drawbacks? The commodity chemicals segment is cyclical -- some products are used in pulp/paper processing and to keep swimming pool water clean, for example -- so analysts will look for signs of a slower-economy-induced dip in orders in Q1/Q2 2008.
The First Call mean rating for OLN is: Buy. [7 firms.] Mean 2008 target: $24.00. [high: $27, low: $20.]
Stock Analysis: Olin Corp. is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from OLN's shares. Sell / Stop Loss if you were to purchase shares in this company: $13.
DISCLOSURE: Joseph Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
Equity traders still missing the big picture?
By most accounts, last Friday's discount rate cut by the Federal Reserve was intended to benefit the beleaguered credit markets, and by extension, lenders and other financial institutions that have suffered as a result of the current upheaval.
Given that, it is interesting that the biggest beneficiaries in performance terms since Thursday's close have been the materials, energy, and industrials sectors.
Some might say that means equity investors interpreted Friday's action as a routine step towards eventual monetary policy easing -- rather than an abrupt policy reversal to address a quickening credit crisis.
More cynically, it may have been seen as just another opportunity to re-enter or add to positions that have been in vogue among the leveraged speculation crowd for quite a while now.
Continue reading Equity traders still missing the big picture?
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