General Cable is also a leading provider of communications network wiring that is deployed by phone companies. Shares had been slumping since last summer after a string of earnings disappointments, but industry conditions have now turned up, and a just-announced strong first quarter could be the start of a new trend.
Analysts anticipate only moderate 5% sales growth in 2012 and 2013 (to around $6.7 billion), but they also see a lot of operating leverage
in the income statement
. As a result, earnings per share (EPS)
are expected to rise around 20% this year to around $2.60, and more than 30% in 2013 to around $3.40. Shares trade for less than 10 times that 2013 outlook, which may not even be the top of the cycle. Analysts at DA Davidson see shares rising form a recent $32 to $40, and that target price assumes shares will trade up to just six times projected 2013 EBITDA.
Risks to Consider: A slowing U.S. economy would make it a lot harder for these companies to exceed a rising level of expectations.Action to Take -->
A few companies on this list may be poised to put together a string of successful quarters. But as noted, don't assume that a one-time profit surge can last. You need to dig into the factors behind the EPS
beat to be assured that better-than-expected profits will be the case throughout the year.
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David Sterman does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article.
This article originally appeared on StreetAuthority
Author: David Sterman