Out Fox The $treet

Small-Cap Insight As the global economy struggles along especially in emerging markets, the domestic engineering firms have seen revenues and profits stagnate this year. Ironically, an unlikely source is now contributing to huge growth expectations over the next couple of years. The shale gas revolution in North America is pushing LNG export projects, and ammonia and ethylene plants back to the US where chemical construction projects had dried up for decades. In the case of KBR, Inc ( KBR ) , analysts expect dramatic earnings increases in out years while the stock still trades at a below market multiple. The company is off to a good start with FEED work on a couple of LNG export projects in British Columbia and the recent announcement of a $600M ammonia project in Louisiana. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

This is the third in a series of articles on the performance of stock sectors since the financial crisis. The first article focused on  steel producers  while the second article was on  women's apparel . As with the first two articles, the goal is review a sector where stock prices remain drastically depressed from highs seen prior to the financial crisis back in 2006-2008. In some cases, this might be a sign that the sector was just overvalued back then and hence the current price is deserved. In other cases, this might signal that the sector has plenty of room for recovery especially if the global economy gets over the current soft patch. Read the full article at Seeking Alpha .  Disclosure: Long FWLT in client and personal accounts. Please review the disclaimer page for more details. This information is provided for informational purposes and should not be relied upon as investment advice. 

In the wake of the of the Goldman Sachs (GS) fraud case, Stone Fox capital decided to use the opportunity to unload the remaining shares in the UltraShort Russell (TWM). It just doesn't pay to hold these ultrashort shares and we don't see the fallout from a 2007 fraud case being long lasting. The case may gather steam and cause more damage then I expect, but we'll stay tuned next week. We added back to the Foster Wheeler (FWLT) shares that we sold for the Growth and Hedged Growth Portfolios last month and started a new position for the Opportunistic Portfolio. Technically FWLT is in a position to breakout with the 20ema crossing the 200ema and we like the future prospects for infrastructure growth. Asia and the Middle East (OPEC) should be ramping up now that world growth is flourishing. Best of all, FWLT is still considerably below the $80 high they hit in 2008. On the earnings front, FWLT made $3.73 in 2008 and they likely will retest those levels by 2012. The estimate fo...

Considering that oil has traded in the $80s range for months now, it shouldn't be that surprising that OPEC would revive projects shut down in 2008-2009. Apparently ever project is now moving forward though that wasn't conveyed by Foster Wheeler (FWLT) and other energy engineering firms in their Q4 reports. Maybe its a sign that we'll see some awards in the next 6 months. Today OPEC announced that some 150 projects are now moving forward to increase annual production by 12M barrels by 2030. Of those projects, some 35 were canceled/delayed and have now been restarted (other reports suggested that 135 projects were delayed). Either way the E&C firms should see higher order rates in the near future if true. Another big issue during the crisis was financing and I'd expect with oil maintaining at these levels that will soon disappear as an issue as well. Members of Opec, the oil exporters’ group, have revived the oil projects they put on hold when oil prices collapsed t...

In order to raise some cash for the Growth and Hedged Growth Portfolios we sold roughly 50% of our positions in both Gafisa (GFA) and Foster Wheeler (FWLT). Both stocks have traded weak of late with GFA dropping below its 20 & 50 EMAs and FWLT being unable to get above the 20EMA even with such a strong tape. Long term though we still like the macro situation for both stocks. Short term we let the charts tell us that the action might turn bearish. GFA is doing an offering next week so that explains the weakness on that stock. With FWLT, its difficult to see why it remains so weak. The news seems bullish and it continues to trade at much cheaper levels then a competitor like Jacobs Engineering (JEC). Foster Wheeler ( FWLT ) estimate changed at Barclays. FWLT 2011 EPS estimates introduced at $2.50, 2010 maintained at $2.30. Reiterate Overweight rating and $38 price target.