Chicago Bridge & Iron Just Keeps Rolling Along
June 23rd, 2011
The impressive equity appreciation story with Chicago Bridge & Iron (CBI), which I first wrote about on April 6, 2009 at a price of $7.31, continues, as the stock is testing psychological resistance at $40.
Further, obviously, if you haven’t already, if you’re in at/near $7.31 or at a dollar-cost-average below $14, now may be a good time to consider taking some profits off the table with CBI.
However, those investors who can tolerate the risk can maintain their full position to go for a possible larger gain, as CBI will likely trade above $45 by the end of 2011.Chicago Bridge & Iron specializes in projects that produce, process, store, and distribute the world’s natural resources. In 2011, revenue should increase better than 15%, led by liquid natural gas business revenue; strength also appears to be building in Canadian oil sands projects and shale gas/unconventional gas projects. Meanwhile, margins should dip to about 12%.
Further, CBI’s prospects for new business in developing markets in China, South America, Russia, and the Middle East provide further encouragement for investors.
The Thomson Reuters First Call FY2011/FY2012 EPS estimates for CBI are $2.38 to $2.73.
Technically, Chicago Bridge’s stock chart is strong — an uptrend, and one that rarely dips to the key, 50-day moving average — a sign that institutional investors are not waiting long to add to positions in CBI.
2011 Outlook: I view Chicago as a long-term play, but if you’re looking to sell CBI within the year, it’s probably best to take your profits after it rises to $48-49, if it fails to clear $50.
Stock Analysis: I consider Chicago Bridge & Iron to be a moderate-risk stock. If an investor has already purchased the company’s shares, I’d hold them. If not, I’d consider buying a 50% position in CBI now; I’d put a sell/stop loss at: $22.
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