The Coming Energy Boom
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Natural gas and oil production have started to change the domestic energy landscape over the past half a decade. One out of every five jobs since the end of the recession has come from the energy sector, the U.S. has become a net gasoline exporter for the first time in a generation, and North Dakota now produces more oil than OPEC member Ecuador does.
- CBI will be one of the primary firms employed to build these huge LNG facilities.
- Analysts expect very solid growth from the company over the next two years. Projections call for 15% to 20% revenue growth for both FY2012 and FY2013, respectively.
- The stock is undervalued with a five-year projected Price/Earnings/Growth ratio of 0.88 and a forward Price-to-Earnings ratio just below 13. It also has a solid balance sheet with more than $600 million in net cash (approximately 15% of its market capitalization).
- The median price target on CBI is a little north of $54 a share. Credit Suisse has an Outperform rating and a $58 price target on the company.
- It has a low five-year projected PEG of 0.88 and a forward PE of just over 9, significantly under its five-year average of 18.2.
- It has easily beaten earnings estimates three of the last four quarters, and consensus estimates for FY2012 and FY2013 have steadily increased over the past three months.
- It has a solid balance sheet, yields 1.8% and sells for around 1x annual revenues.
- The median price target is $64.50. Stifel Nicolaus just initiated the stock as a Buy earlier in the month. Given the company again beat estimates easily on the top and the bottom line earlier in the week, I would look for price targets to be raised over the coming few weeks.