Out Fox The $treet

The worldwide crane market was crushed during the financial crisis and still hadn't recovered as 2010 ended, even though several industrial and mining equipment manufacturers have already recovered to pre financial crisis levels such as Caterpillar ( CAT ), Joy Global ( JOYG ) and Bucyrus ( BUCY ). Fortunately for U.S.-based crane makers, Q1 2011 saw a surge in orders and finally signals of a market recovery. Both Manitowoc ( MTW ) and Terex ( TEX ) saw huge backlog increases in the crane segment. MTW had a nearly 40% increase in backlog to $800M from the $572M reported at December 31st. TEX had a 30% increase in backlog and like MTW saw plenty of demand in North America. The total went from $774M to $1,004M. Read the full article at Seeking Alpha . Disclosure: Long TEX in client and personal accounts. Please read the disclaimer page. 

It appears that Terex (TEX) has finally turned the corner. Up till now, TEX has remained one of the few companies to not turn around from the 2008 financial crisis. Sure TEX had clearly bottomed out, but after selling their mining equipment business to Bucyrus (BUCY) it left them with a construction heavy product portfolio that continued to remain weak. The Q1 earnings report finally showed a turn in the cycle as opposed to the bottoming process of the last 6-9 months. Sure the backlog had increased over the last few quarters, but this time TEX reported a 30%+ QoQ increase in all 4 segments: AWP, Construction, Cranes, and Materials Processing. AWP had a whopping 45% sequential increase and a 123% increase over last year. Cranes which accounts for over 60% of the total backlog saw a surprising turnaround with a 30% sequential increase while down on the year. Backlog has trended from a low of $1.12B in Q210, $1.223B in Q310, $1.3B in Q410, to $1.79B in Q111. The trend has now become ...

As the largest shareholder of Bucyrus (BUCY), Terex (TEX) is a big beneficiary of the buyout of BUCY by Caterpillar (CAT).  TEX owns 5.8M shares now worth over $500M. Not only do they get the appreciation from the 30% gain today, but more importantly TEX gets to cash out their shares that they acquired via the sale of their mining division to BUCY at a premium. Having the $500M in cash on hand is a lot more valuable to them then stock in BUCY. TEX provides one of the best stock picks for the global rebound. At $25, TEX provides one of the few remaining stocks that hasn't rebounded. The stock still remains roughly 75% below 2008 highs while some stocks have already eclipsed those highs ala BUCY. The crane industry is still struggling to recover from the financial crisis, but signs are emerging that 2011 will the recovery year and TEX likely plays catchup with the market. TEX now enters the recovery phase of its business cycle with a rock solid balance sheet. After the close of t...

Incredible news from Vale (VALE) the leading iron ore producer in the world located in Brazil. VALE plans to double capital  spending int 2011 to $24B in order to diversify away from iron ore and into pricier metals and fertilizers. This is nearly a doubling from the $12.9B planned for 2010. Who will benefit from the increased spending? Naturally companies like Joy Global (JOYG), Bucyrus (BUCY), and Caterpillar (CAT) could see improved orders. Terex (TEX) could see some orders for its new port crane business as well. What's interesting is that a large portion of the increase will go towards logistics building of expanding rail capacity and ports. Maybe that explains why CAT recently expanded its rail engine exposure. One of the major focuses of the spending will be on fertilizers. Goals include doubling phosphate rock output and quadrupling potash production by 2015. Coal production will also nearly quadruple with just about every area nearly doubling. As far as VALE, its n...

Terex is one of the largest builders of Construction and Mining equipment in the world. Late Sunday night they announced a deal to sell their mining equipment business to Bucyrus (BUCY). According to management, this deal for $1.3B in cash (or potentially $300M in BUCY stock) allows for TEX to focus on the Crane, Aerial Work Platform, Construction, and Materials Processing sectors. It also provides TEX with much needed liquidity in this liquidity strained market. The deal transfers about 20% in sales or roughly $1B from 2009 totals, but only 15% of sales back in the boom times of 2008. The mining segment was also requiring over 20% of working capital expenditures even though in normal times it doesn't produce more then 15% of revenues. On the Conference Call this morning to discuss the deal, the CEO announced that TEX has a goal to double revenues to roughly the $8B level and EPS to $6 by 2013. Impressive numbers for a $20 stock with a $2.2B market cap if they can achieve those n...