For all of you native Houstonians out there, here is a play that hits close to home- literally. We are placing Cameron International on our strong buy list for the portfolio. In order to manage the portfolio effectively, we will be staying with 10 names and, as a result, we will have to swap a name out.
We believe energy is getting cheap here as destruction demand from Hurricane Sandy will be short-lived and, Cameron’s backlog announced for next year is over $7 billion- that translates to a near double in the stock price if overall market conditions remain the same. The energy space is cheap, and Cameron International, being a best of breed company, is even more attractive than its competitors.
“While overall market growth in North America is under pressure, the company’s outlook for the fourth quarter is robust, with visibility to orders in the international and deepwater markets,” Chief Executive Jack B. Moore said. “Additionally, we continue to gain share in our surface North America market.”
For the latest period, Cameron posted a profit of $223.6 million, or 90 cents a share. Revenue increased 32% to $2.22 billion. Cameron reported orders were up 15% to $2.3 billion. Meanwhile, Cameron’s backlog at the end of the third quarter was a record $7.6 billion, up from $5.8 billion a year earlier.
We always find good companies. The question is, is it a good buy at this current moment. Well, the chart below tells the story. P.A. and Will, here is an easy one to start with.