Sunday, May 8, 2011

General Cable: "Wired for Success" (BGC)

The stock is extended, having better than doubled off the August 2010 lows and relative strength is falling.
That said, the decline halt at the 50-day moving average grabs one's attention.*

From Barron's:
From underground fiberoptics to underwater cable lines, General Cable is wired for growth.
As a maker of copper, aluminum and fiberoptic wire and cable products, General Cable (ticker: BGC) is well diversified both geographically and across industries, from utilities to infrastructure and telecommunications.

Yet the stock remains cheap on a historical basis, and its recent falloff despite reporting better-than-expected earnings could make a good entry point for investors.

"The stock is one of the most concentrated ways to play electric utility spending on a global basis," says Stifel Nicolaus analyst Jeffrey Beach. He estimates that the stock could nearly double, to $96.50, in the next three years, "as strong organic revenue growth drives margins at a rapid pace."

The company gets roughly 30% of its business from utilities, 28% from infrastructure, and 25% from communications, its three main divisions. It also gets approximately 70% of its revenue from overseas, which gives it diversity across the globe, across several industries, and exposure to early- and late-cycle markets.
This has helped General Cable stay strong throughout the progressive stages of the economic recovery and could provide more upside ahead.

"General Cable has yet to really see any material recovery in a lot of its end markets; construction and utilities are just starting to kick in, which, combined with advantages of scale, make it very attractive," says KeyBanc Capital Markets analyst Anthony Kure. "Margins aren't what they could be if there were more robust demand; its operating leverage is unappreciated here."

Kure estimates that the company could realize 15% to 20% incremental operating margins on the next $1 billion to $2 billion in revenue, allowing it to enjoy this growth without adding a substantial amount of fixed cost. His estimate of 2012 earnings per share of $3.80 assumes the low end of that range....MORE

Feb. 4, 2011
UK investor buys 7% stake in General Cable (BGC)

These guys are a class act. Sarasin & Partners runs about $15 Billion.
The parent company Sarasin Group owns one of the best Swiss private banks....

Aug. 4, 2010
Transmission: "General Cable Has a Line on Growth" (BGC)