Out Fox The $treet

All year long, the monthly Architecture Billing Index, or ABI, has suggested that the non-residential construction market would boom in the next year. So far, the actual gains haven't showed up -- but that may only be a matter of time. Whether difficulty in obtaining project financing is slowing down the actual construction, or a lack of confidence in the U.S. government is giving potential builders pause, the ABI work will eventually occur. The companies that will benefit from a boom in non-residential construction will naturally be construction equipment manufacturers and equipment rental firms. Based on recently released results, United Rentals ( NYSE: URI     ) is already seeing a boom as construction firms look to rent more in a shaky business environment. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Small-Cap Insight A year after originally writing about the key margin improvements expected at Terex Corporation ( TEX ) , the amounts are still a future expectation. In fact, back in 2009 the company originally presented the expectations that operating margins would increase to 12% by 2013. The number though still languishes around 6% on a yearly basis. The company remains a leader in the manufacturer of machinery and industrial equipment focused on aerial work platforms ( AWP ), construction, cranes, material handling and port solutions (MHPS), and materials processing segments. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

The recent results of United Rentals (NYSE: URI ) don’t bode well for the results of equipment manufactures such as Terex (NYSE: TEX ) or Manitowoc (NYSE: MTW ) . United Rentals claims the largest equipment rental company in the world, operating 824 rental locations in North America. The company reported results that again smashed estimates, sending the stock soaring 10% higher for the initial day of trading after the report. The limited more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

In the Q4 earnings release, Terex (NYSE: TEX ) announced the goals of earning $5 in 2015. Considering the company just reported a year of achieving $1.83, the natural question is whether the company can legitimately grow earnings that fast over the next 3 years. The company is a diversified global manufacturer of equipment focused on aerial work platforms, construction, cranes, material handling and port solutions, and materials processing. With more » Disclosure: Long TEX. Please review the disclaimer page for more details. 

After a year of smashing results, will United Rentals (NYSE: URI ) continue leaving analyst estimates in the dust? The company reported earnings of $1.27 for Q4 that smashed the $1.01 estimate. A leading supplier of construction and industrial equipment for rent has become a surprising breakout star during a time period when those particular markets were expected to struggle. In fact, a prime rental equipment market of non-residential more » Disclosure: Long TEX. Please review the disclaimer page for more details. 

Manitowoc Company Inc. (MTW) closed out last week trading at the 6-month high levels of $15. While the market envisions the company as a crane manufacturer that competes with Terex Corporation (TEX) , it currently obtains higher operating income from the food service division. The company currently has a mark cap of $2B and only trades at 5x the trailing twelve months EBITDA of nearly $400M. With limited operating margins in the crane division, the company has yet to see any rebound from the global financial crisis. The company faces similar margin issues as Terex in comparison to a mega-cap like Caterpillar (CAT) . In the last few months, a shift is occurring as stocks focused more on construction equipment have performed better than ones with mining exposure. Read the full article at Seeking Alpha. Disclosure: Long MTW and TEX. Please review the disclaimer page for more details. 

The poor man's Caterpillar Inc. (CAT) appears to have finally turned the corner. Terex Corporation (TEX) continues to report solid margin expansion even with limited sales growth. In the past, the company routinely reported substantially lower margins than the market leader even in high growth periods. The company is a diversified global manufacturer focused on aerial work platforms, construction, cranes, material handling and port solutions, and materials processing. While investors might have been disappointed with lower than expected sales during Q3, the more important number remains the solid margin expansion. Generating free cash flow and improving the balance sheet is more important than growing revenue. Read the full article at Seeking Alpha. Disclosure: Long TEX and MTW. Please review the disclaimer page for more details. 

Though a lot of focus exists over the copper inventories in China, the LME inventories continue heading south toward the lows in 2007/8. Ultimately this has to be very bullish for copper and construction stocks. Especially considering North America is just now heading into the heavy construction period. The market has been so focused on the Chinese story regarding copper that it has completely ignored that the US is a dominant player in the demand story. At some point we're still expecting a strong US rebound by 2013 and China to continue with strong growth. The market is not prepared for both of the 2 largest users to be strong at the same time. Below is the 5 year chart from kitco.com. As the chart shows, inventory levels haven't been this low since the last bull construction market in the US. Now though, levels are heading that way before construction has even become strong. Naturally copper stocks such as Freeport McMoRan (FCX) will benefit the most, but constru...

This model lost a disappointing 5.8% in March versus a 3.1% gain for the benchmark S&P 500. This model typical outpaces the major indices by a large margin in up periods so the last month was a major exception. Since the end of 2011, this model has been running on the theme that the majority of stocks would retrace the losses experienced since the July 2011 levels. In essence, our theory all along has been any losses since that time period were from irrational fear of a second financial collapse that the Europeans were unlikely to allow. Naturally this fluctuates on a case by case basis where any individual stock could move a lot higher or lower depending on circumstances since then. Unfortunately this theory took a major turn in March as investors piled into dividend paying stocks sending most major indices higher while at the same time selling the higher risk, global growth stocks. In some cases, it was just a small reversal of the gains from the last couple of ...

Last week, the market presented some major signs of the beginning stage of a recovery in the construction sector. First, railroad shipments of lumber and crushed stone increased dramatically. Second, PPG Industries (PPG) reported blowout earnings in part due to a recovery in the US construction market. While most construction related stocks have already had a run, most are no where near multi year highs. Several options exist for playing the construction recovery. The main debate is whether to focus on US based companies that will benefit solely from the rebound in US construction or globally based companies that will benefit from the largest two economies (US and China) rebounding at the same time. Read the full article at Seeking Alpha. Disclosure: Long ANR, FCX, SHLD, and TEX. Please review the disclaimer page for more details. 

Absurd that this country can't pass a long-term transportation bill. Dysfunctional to say the least in Congress. Even with these issues, Terex (TEX) is hiring 500 employees in Washington for Aerial Work Platforms though it is unfortunately only to replace aging equipment as much as new equipment. Globally though Terex continues to hire as infrastructure is a lot higher priority for those countries. See below interview CEO Ron DeFeo on Bloomberg: Disclosure: Long TEX. Please review the disclaimer page for more details. 

This model gained a solid 21.4% in February versus 4.1% for the benchmark S&P 500. This model typical outpaces the major indices by a large margin in up periods and last month was no exception. Since the end of 2011, this model has been running on the theme that the majority of stocks would retrace the losses experienced since the July 2011 levels. In essence, our theory all along has been any losses since that time period were from irrational fear of a second financial collapse that the Europeans were unlikely to allow. Naturally this fluctuates on a case by case basis where any individual stock could move a lot higher or lower depending on circumstances since then. This conviction has allowed us to hold onto a highly leveraged portfolio and see significant gains this year as stocks like Apple (AAPL) , Dicks Sporting Goods (DKS) , Liz Claiborne (LIZ) , and Radware (RDWR) all reached those July levels by February. Other stocks like Manitowoc (MTW), Sears Hold...

After a bad 2011, this year got off to a fantastic start with the model seeing a 25% gain in January easily outperforming the 4.4% gain for the S&P500. The model spent most of the month accumulating cheap stocks in order to take advantage of the market rallying against the proverbial 'wall of worry'. January was an interesting month with stocks rising even in the face of what appeared like continued negative news out of Europe. With the continued focus on Greece, most investors stayed out of the stock market and missed that yields on Italian and Spanish bonds saw dramatic declines. The ability to isolate the problems to Greece and Portugal to a lessor extent were a big relief to a market pricing in a European blowup in December. In addition, the decline in emerging markets inflation was a big benefit to the under performing stock class in the new year. Specifically fast growing countries like China and India saw multi year lows in inflation rates allowing monetary polic...

Back in October I wrote an article about how stocks could reclaim highs from July. At the time, numerous stocks were down 50-60% from those July highs after the dramatic summer sell-off that didn't appear to be justified. Since that article, numerous stocks such as Toll Brothers (TOL) and F5 Networks (FFIV) have already recaptured the July highs and more. Much to my surprise, homebuilders lead the market higher. Not to mention the Nasdaq composite has soared to 11 year highs. Clearly the theory has worked in some situations, such as the above growth stocks and particularly with most dividend-paying stocks. Numerous stocks still trade considerably below those July highs, providing opportunities for investors. The original report focused on Riverbed Tech (RVBD), Terex (TEX), Hartford Financial (HIG), and Weatherford International (WFT) . None of these stocks has recaptured those July highs providing plenty of opportunity for investors to still get in on these stocks. Read ...

After a strong 2009 and 2010, 2011 was a year to forget for this portfolio. The market hit highs around the end of April and this model was soaring to new heights at the time. Many of the holdings had valuations nowhere near the 2007/08 peaks or even close to what would normally be considered rich. Regardless, leverage was reduced since some gains were significant. Then, unfortunately most of the stocks collapsed and even in a few cases approached 2009 lows. With too much leverage left, the model was hit very hard. The good news is that valuations started the year as attractive as during the financial collapse of 2009. 2012 Outlook Portfolio Construction The portfolio remains overweight on the global growth theme. Most of the stocks in this sector trade as if emerging markets are headed towards a recession instead of continued growth. The biggest challenge to our investment strategy in 2011 was the major inflation fears in emerging markets like China, India, and Brazil. As 201...

Back in July of last year, I did a series of articles about companies with relatively cheap valuations that were expecting the fastest earnings growth in 2012 (See 1, 2, 3, 4). These companies offered the potential for huge stock gains if earnings estimates were met. Unfortunately, just as I wrote those articles the global economy went into a tailspin due to the European debt crisis and stock prices collapsed along with the earnings estimates of the majority of those stocks Now as global stock markets appear ready to head upwards, it seemed like a good time to revisit this list. It is always a good idea to check the outcome of a previous concept. How did the stocks perform? Were earnings estimates met? What about the valuation now? Read full article on Seeking Alpha. Disclosure: Long CRZO, MTW, and TEX. Please review the disclaimer page for more details.

Haven't been a big fan of Cramer lately, but I 100% agree with his opinion on the cut in the reserve ratio for China banks. This is a game changer for China as the economy was beginning to show signs of slowing. China is clearly at the beginning of the interest rate cuts. Our favorite stocks to play the reemergence of China include coal producer Alpha Natural Resources (ANR), copper producer Freeport McMoRan (FCX), crane producer Terex (TEX), oil service company Weatherford (WFT) and ChinaCache (CCIH). Disclosure: Long ANR, FCX, TEX, WFT, CCIH. Please review the disclaimer page for more details.

Terex (TEX) has seen 11 insiders make purchases providing a very strong insider buying signal called a "cluster-buy". The insiders purchases 32,502 shares at an average price of $14.71/share, for a total of $478K.  Not a massive amount of money, but definitely a strong signal with the purchases being so wide spread. Of course, it could just be a internal scam to trick outside investors.  The interesting opportunity presented investors today is the ability to buy shares at prices lower the insiders. As much as people think the game is rigged, other people realize that it does present opportunities to buy at the same price as people with inside knowledge.  TEX has been saying for a long time that its business has been picking up, but the market has ignored them for the post part. It wouldn't be the first time that insiders were blind to changes in the global economy.  TEX is a solid holding in our Opportunistic models as below so we're definitely hoping...

October was an exceptional month with a 47.9% gain versus the 10.8% gain for the benchmark leading to a 37.1% outperformance. Unfortunately, this was only a small recovery from the July, August and September selloff. With many stocks in the model still trading far below the July highs, substantial upside remains just to recapture those levels. Though global GDP growth came under pressure during the summer and fall months, US corporations are reporting record profits. The yield curve remains very positive suggesting an attractive environment exists for equities. On a daily basis, it's becoming more apparent that the summer swoon was more of investor panic than a economic reason suggesting a return to even the April and May highs of 1,370 on the S&P 500 is probably warranted. China remains a key focus of the model. While investments in China based stocks have been greatly reduced, the model still relies heavily on the demand for materials and construction related items coming...

After a summer of watching the markets tank-- especially in the global growth sectors, the economic news and earnings reports clearly haven't backed up the market dive. This apparent fear of a 2008 repeat without the matching reality got us to thinking about what would happen if stocks reclaimed prices prior to the summer swoon. Nothing aggressive like 52 week highs or even all time highs, just a simple recent stock price that the numbers suggest shouldn't have been thrown away. Considering numerous high fliers and leading dividend stocks were able to maintain prices at 52 week highs, why couldn't others recapture those recent highs? In some cases, levels not even close to 52 week highs. Read the full article at Seeking Alpha. Disclosure: Long HIG, RVBD, TEX, WFT. Please read the disclaimer page for more details.