To be disciplined, I initiated a position in Chicago Bridge & Iron on the pullback today. We are treating this stock as a trade to add more leverage to the portfolio. 15% upside, 2% downside, so this risk/reward makes it easy to take our foot off the gas should the overall market continue to fall. We also like the diversification that it adds: capital goods (cyclical). 81% of their revenue is tied to commodity prices as well so that gives us adequate exposure to the energy/alternative energy space. The SHAW group acquisition was monumental; did you know SHAW controls nearly 50% of all nuclear reactors in the world? That synergy & diversification will help their business substantially and now brings CBI’s backlog into the billions (CBI is a 5 billion market cap company, you do the math on the future stock price there).
Chicago Bridge & Iron (CBI). A pullback to the 20 (bullish).
Update: 2/21/2013
Stocks are in no man’s land today struggling to either hold support or are in between their support/resistance levels. Too early to buy or sell. Added to CBI as planned at the 20, and the stop is now put in place. If we go lower, we stop out of CBI and get a chance to add to more of our core positions (UPRO PHM FB & BAC) at attractive valuations. If we go higher, our current positions as well as the trade in CBI should allow us to participate nicely going forward. Regards.
