The title says it all. Global economy is on the rise with never-before-seen demand for natural resources and their applications. Indeed bridges, roads, rails, pipes, filters, pumps and other such systems, which often make up the difference between a third world economy and the western world, are being put to use in every corner of the developing world. Of course, to go out and buy all the stocks listed here would be an exercise in non-diversification and I strongly advise against it. The steep drop in the market this week is an opportunity to start accumulating some of these stocks. For those who like to track these, I have created a trackable portfolio of these stocks
here on Stockpickr.com.
Chicago Bridge & Iron Co. (CBI) - This is a Dutch infrastructure play that has its hands wet in water, oil, chemicals, power, metals and mining. The company provides engineering and construction services for all of the above industries and its presence in Europe makes it a unique play on global, specifically European economic expansion.
The company has only $25 million in debt, which pales in comparison to the almost $700 million it has in cash. With $7 per share in cash, CBI trades at a mere 18 times 2008 earnings and its valuation can be summarized in one word - cheap.
Earlier this month, Chicago Bridge & Iron Co., was awarded two Middle East contracts with a combined value of $130 million. With demand for infrastructure in under-developed economies, this is just one of many contracts to come their way.
Foster Wheeler (FWLT) - Foster Wheeler is a Cramer favorite. He spotted it when no one had heard about it. The stock has tripled in the last 12 months and most people believe the run is far from over. The last time this company reported earnings, their profits showed a quarterly increase of almost 700% over the same quarter last year.
Foster Wheeler designs onshore and offshore oil and gas rigs, natural gas liquefaction facilities oil refineries and other facilities for the petrochemical industry. Additionally, the company also provides infrastructure support for power plants and waste processing plants.
2006 was a banner year for Foster Wheeler. That is the year the company went from losing $110 million the year before to making $260 million. Here is where it gets a little tricky. The second quarter of 2006 was a huge one for them and it will be hard to top that by a huge margin this year. But if there is one company that can pull it off, it is Foster Wheeler. The company has surprised to the upside last 4 quarters in a row by 44%, 57%, 69% and 113% respectively – no small feat. I believe the company can easily earn $6 per share this year, considering that they raked in $1.60 per share just in the first quarter.
