JBL: Getting All Worked Up Over Nothing

The recent furor over Fluor's fourth-quarter results overlooks the company's huge upside potential.
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I swear Wall Street is sometimes like a bunch of old men sitting around a barbershop -- telling the same old stories and getting worked up over nothing. Recently, Wall Street has been getting worked up about

Fluor

(FLR) - Get Report

, which is in the investment doghouse. But Fluor's death is greatly exaggerated.

Fluor's raison d'etre is building things fast -- and well. When it recently moved to Las Colinas, Texas from Southern California, Fluor completed a three-story, $60 million headquarters building in eight months, a project that would take most builders 12 to 15 months.

Fluor is rebuilding Iraq's water system and installing thousands of temporary homes in hurricane-damaged Louisiana, one of over 80 disaster areas where the company has provided services to the U.S. government. Fluor is even overseeing the construction of pedestrian tunnels that lead to subways at the World Trade Center. It's also involved in major transportation projects, including building State Highway 130 in my home state of Texas.

After a flurry of contracts in 2004, the company posted fourth-quarter results that were disappointing in terms of new bookings and operating earnings. The company also suffered a decrease in its operating margin, which it credited to losses on U.S. embassy projects, for which Fluor is now assessing its "continuing interest."

The good news is that the company has a backlog of almost $15 billion, $9 a share in cash and very little debt. Consensus EPS estimates are for $3.05 this year and $3.79 next year, a 28% increase.If the current price-to-earnings ratio of 32 stays constant, you're looking at a $97.60 stock based on 2006 estimates and a $121.28 stock on expected 2007 earnings. Now that is something the old men at the barber shop can really talk about.

Fluor is a great company that is positioned well in front of what I believe is a major capital investment cycle. The infrastructure that they build better than anyone else is vital to economies around the world. Fluor, I believe, is a good core holding that is trading at attractive levels after its recent hiccup. It closed Friday at $84.29.

Rattlesnake Highway

My apologies, but I have to keep it (relatively) short this week as I'm traveling to Detroit for the return of

WWE's

Saturday Night Main Event on NBC, where I'll face off against "Stone Cold" Steve Austin ... in a beer-drinking contest. Now

that's

good work if you can get it.

Remember,

being poor is bad, staying that way is stupid.

At the time of publication Layfield had no position in stocks mentioned, although holdings can change at any time. A former All-American offensive lineman at Abilene Christian University, John Layfield played professional football for the then-Los Angeles Raiders and later in the World League. After wrestling in Japan, Mexico and Europe, Layfield arrived in the WWE in the mid-1990s. A former WWE champion, JBL was a featured wrestler at WrestleMania 21 and can also be seen on

Friday Night SmackDown!

on UPN. Outside of the ring, JBL is a self-taught investor who was recruited to write a personal finance book,

Have More Money Now

, which was released in the summer of 2003. He has appeared on finance shows on CNN and Fox News Network. He is co-chairman of the Smackdown Your Vote! Campaign and he has joined both the USO and Armed Forces Entertainment (AFE) for tours through Iraq, Afghanistan and other Middle East countries. He regularly visits the Walter Reed Army Medical Center and the Bethesda naval hospital to meet with wounded troops.