Since the beginning of the year, three major indices have been on a bullish run where Dow Jones had crossed the 14,000 mark and S&P 500 had broken thorough the 1,500 level. Even with the recent market run-up, Gardner Denver, Inc., the Allstate Corporation, and Chicago Bridge & Iron Company may be poised for more gains in 2013 as indicated by unusual high volume of call options, which can be a precursor of a major movement for the underlying stock.
Gardner Denver, Inc.
Gardner Denver, Inc. (NYSE:GDI) is a global manufacturer of engineered compressors and vacuum products for industrial applications. GDI closed at $70.43 on February 1 with 0.09% gain. GDI had been trading in the range of $45.54-$80.23 in the past 52 weeks. GDI has a beta of 1.36. GDI has a daily call volume ratio of 4.94.
On January 22, 2013, Robert W. Baird reiterated their outperform rating on GDI with a $80.00 price target. On January 31, 2013, GDI had requested buyout firms to final bids for the industrial machinery maker by mid-February. As reported by Reuters, "Buyout firms Advent International Corp, KKR & Co LP, and the partnership of TPG Capital Management LP and Onex Corp have been weighing final bids after meeting with Gardner Denver's management in the past few weeks."
Fundamentally, GDI has an enterprise value of $3.65B with a market cap of $3.46B. GDI has a total cash of $248.93M with a total debt of $440.75M. GDI generates an operating cash flow of $290.68M with a levered free cash flow of $188.99M. GDI has higher revenue growth (3 year average) of 5.5, as compared to the industry average of -0.4. GDI has a slightly lower operating margin of 16.2%, ttm, comparing to the average of 16.3%, ttm. GDI has higher net margin of 11.4%, ttm, as compared to the average of 8.8%, ttm. GDI generates higher ROE of 20.9, comparing to the average of 15.4. GDI's P/E of 13.0 is lower than the industry average of 18.6 but higher than GDI's 5 year average of 8.4. GDI has a forward P/E of 9.0, which is lower than S&P 500's average of 13.3.
Technically, the MACD (12, 26, 9) indicator is showing a slightly bullish trend, and RSI (14) is indicating a slightly bullish lean at 54.62. GDI is currently trading above its 50-day MA of $69.81 and 200-day MA of $61.54, as seen from the chart below.
The Allstate Corporation
The Allstate Corporation (NYSE:ALL), a holding company for Allstate Insurance Company, engages in the personal property and casualty insurance business and the life insurance, retirement and investment products business. ALL closed at $44.84 with 2.14% gain on February 1, 2013. ALL had a new 52 week high of $44.99 on the last trading day. ALL has a beta of 1.47. ALL has a daily call volume ratio of 8.86.
On January 31, 2013, A.M. Best Co. had affirmed the financial strength rating, FSR, of A+ (Superior) and issuer credit ratings, ICR, of "aa-" of all members of Allstate Insurance Group (Allstate). ALL's target price was lifted by analysts at MKM Partners from $50.00 to $55.00 with a "buy" rating on January 30, 2013. On January 24, 2013, Sanford C. Bernstein reissued their outperform rating on ALL with a $45.00 price target. ALL is favored by analysts for its strong buyback activity.
Fundamentally, ALL has an enterprise value of $24.13B with a market cap of $21.60B. ALL has a total cash of $3.52B with a total debt of $6.06B. ALL generates an operating cash flow of $2.88B with a levered free cash flow of $2.13B. ALL has a lower revenue growth (3 year average) of 3.6, as compared to the industry average of 4.0. ALL has higher operating margin of 11.5%, ttm, and net margin of 8.0%, ttm, comparing to the averages of 7.3% and 4.8%, ttm, respectively. ALL has a stronger ROE of 13.5 (vs. the average of 4.8) and a low debt-to-equity of 0.3. ALL's P/E of 8.6 is lower than the industry average of 11.9 and ALL's 5 year average of 10.6. ALL has a forward P/E of 7.8, which is lower than S&P 500's 13.3.
Technically, the MACD (12, 26, 9) is showing a bullish trend and the MACD difference diverged in the last trading day. RSI (14) is indicating a strong buying momentum at 69.95. ALL is currently trading above its 50-day MA of $41.68 and 200-day MA of $37.56, as seen from the chart below.
Chicago Bridge & Iron Company N.V.
Chicago Bridge & Iron Company (NYSE:CBI), Netherlands-based, is an engineering and construction company that provides conceptual design, technology, procurement, fabrication, and commissioning services to energy and natural resource industries worldwide. CBI closed at $51.25 with 0.87% gain on February 1, 2013. CBI made a new 52 week high of $51.75 on the last trading day. CBI has a high beta of 2.32. CBI has a daily call volume ratio of 12.16.
On January 24, 2013, CBI won a contract in excess of $175M from DONG Oil Pipe A/S for the engineering, procurement and construction services of the DO Hejre Crude Stabilization Project at the DONG Oil Pipe Oil Terminal in Fredericia, Denmark. CBI was also awarded a $550 million contract with Exxon Mobil Corp. (NYSE:XOM) in late December, 2012. On December 19, 2013, CBI announced that it was expecting revenue to be in the range of $6.3-$6.7B and EPS in the range of $3.35-$3.65 for fiscal 2012, where were above analysts' estimate revenue of $5.4B and EPS of $2.98.
Fundamentally, CBI has an enterprise value of $4.35B with a market cap of $4.96B. CBI has a total cash of $654.75M with a total debt of $40.00M. CBI generates an operating cash flow of $362.24M with a levered free cash flow of $226.71M. CBI has a lower, negative revenue growth (3 year average) of -8.5, as compared to the industry average of -2.7. CBI has higher operating margin of 8.0%, ttm, and net margin of 5.4%, ttm, comparing to the averages of 3.8% and 2.2%, ttm, respectively. CBI's ROE o 22.7 is higher than the average of 7.6. CBI's P/E of 17.9 is lower than the industry average of 28.8 but higher than CBI's 5 year average of 2.6. CBI's forward P/E of 12.3 is lower than S&P 500's average of 13.3.
Technically, the MACD (12, 26, 9) had turned slightly negative on the last trading day. However, the momentum indicator, RSI (14), is indicating a strong buying momentum at 77.46, where above 70 is considered as over-bought. CBI is currently trading above its 50-day MA of $45.04 and 200-day MA of $39.94, as seen from the chart below.
In short, above three stocks may be poised for more gains in 2013. However, with the recent run-up where ALL and CBI had just made new 52 weeks high, investors may need to be patient to wait for a better, safe entry point.
Note: All prices are quoted from the closing of February 1, 2013. Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.