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Today I'd like to highlight another growth stock trading at a very discounted valuation. I believe we are close to a bottom because 35% of stocks on the NYSE are trading below their 200-day MA, thus it allows us to pick good growth stocks. Without further ado, let me start with what MTW does:

The Manitowoc Company, Inc. engages in the manufacture and sale of cranes and related products, foodservice equipment, and marine in the United States and internationally. It offers engineered lift solutions and lifting equipment, as well as designs, manufactures, markets, and supports a line of crawler cranes, mobile telescopic cranes, tower cranes, and boom trucks (source: Y! Finance).

Catalysts that make MTW a buy:

* MTW recently increased its full-year earnings expectations to a range of $2.50 to $2.60 per share, from previous guidance of $2.15 to $2.20. Analysts expect earnings of $2.34 per share. BAC analyst Seth Weber said strong demand for the company's cranes, both domestically and abroad, is fueling results.

* MTW is one of the world's largest providers of lifting equipment for the global construction industry. The crane business is booming, as commercial construction and infrastructure build-out and repair are strong both at home and abroad. Developing countries are reinvesting their export income into new highways, airports, power plants and grids, waste treatment facilities, office buildings and residential developments rapidly.

* With the global boom, MTW's operating margins are set to expand in '06, based on outlook for improving demand for the MTW's cranes, combined with the likely incremental benefits of previously implemented cost reductions.

* S&P expects better price realization in 06 as previously announced price increases begin to take effect. S&P sees these factors outweighing the likely negative impact of continued high steel costs that are being anticipated. Expect to see interest expense declining over time as MTW utilizes its expected free cash flow for net debt reduction.

* The best part of MTW is its valuation. With stellar growth & increased earnings forecast, the stock trades at a meager forward multiple of just 17 for long-term growth of 40% vs. CAT's 14% & DE's 9% growth (Analysts actually expect growth in high 40s, but I’m being conservative!!). Another positive for MTW is increase in OBV over the last month, which indicates accumulation by institutions.

* Lastly, MTW's revenues were up 22% to $2.2 billion, while net earnings rose 50% to $2.14. In the first quarter of 2006, sales increased 24% to $633 million. The best part being, the 85% YOY surge in backlog (up to $1 billion) in the crane segment.

So with the above 6 catalysts, I expect MTW to outperform its peers & the market averages over the near term.

MTW 1-yr chart:

MTW 1-yr chart

Disclosure: I own the stock.

Source: Catalysts that Make Manitowoc Worth a Good, Hard Look (MTW)