This company was a Bill Mann darling I think from the Hidden Gems days. I believe it’s an energy infrastructure company. Right now it’s growing at a considerable clip and it looks cheap. Looks like it has a PEG of .63. Anybody have any thoughts on this company? I’m looking for some new places to put money.
Thanks
Keith
Own a couple of engineering co.s but not CB&I. A general observation–
if they have a large portion of revenue coming from energy ie O&G, the market is likely to send the share price down. Might create a buying op.
Hi MonsterFluff
Do you mind sharing some of the companies you’re invested in, in the engineering space? I’m trying to gain exposure to some industrial type companies or engineering companies. Actually I don’t really know a lot about this sector.
Thanks
Keith
Keith, any idea why CBI has dropped from $87.50 to about $54 in the past six months or so, with such good earnings and low PE? I’m curious.
Saul
Fluor is a good company. They take on the big elephant projects worth billions. They usually have a decent backlog.
Fluor has both mining and O&G business anad as it so happens, mining has been in a slump for over a year with coal and iron ore scraping bottom. O&G will be next and the market is anticipating a big decrease in revenue
You might be interested in this article
http://online.barrons.com/articles/oil-slump-makes-fluor-sto…
Jacobs is the opposite. They pick up much smaller jobs and also do maintenance type work. They have a presence in tar sand and that will be the first oil to get shut down since it’s among the most expensive to produce They also do a lot of aerospace and health industry work.
WIth CB&I you need to start by looking at the percentage of revenue in O&G and then find out who their customers are. Also look at the mining exposure. How much backlog do they have? Do they do roads and bridges demanding government spending? that’s always a tough one to predict.
I work in sales at a steel fabrication group in Southern California. We have done some business with CBI through their recently acquired subsidiary Shaw, and we deal with several other large general contractors all over the Western US. While CBI is one of the largest in the space, I can tell you that contracting is an extremely competitive business. Contracts can be massive in terms of overall $ volume, but margins are very thin.
It would be tough to predict if a certain general contractor will gain share in the market. If the play is valuation-based, or on the general market improving and lifting all boats, I can understand that. Otherwise IMO it’s a tough bet to make.
Thanks for the insider view.
Anirban
Saul I’m guessing they are down because they are labeled an energy infrastrcuture company and most of those companies are getting punished with over supply of oil.
I was just trying to find some discounted industrials since I keep hearing how well this sector is doing. It sounds like a lot of people on this board have personal experience with CBI and don’t think it’s a great investment.
For me it looked like a relatively safe way to make 30% once the price of oil stabilizes especially if the company can grow at its current rate.
Just looking for some new companies to put money to.
Keith
Just looking for some new companies to put money to
Looking for values at all time highs for the index is going to be tough and you’ll have to stick with underperforming sectors like energy. The majors are in decent shape and haven’t lost a lot of value but small caps, services, and deep water are some of the biggest losers
Places I would look but not necessarily buy just yet are
Carbo
Core Labs
Seadrill
Halliburton
RIG
Apache
Fairmount
Cameron
DrillQuip
Schlumberger