By Mike Cintolo
My stock idea this week is Manitowoc (MTW), which is in the exciting business of … cranes. Seriously! The big idea here isn’t that the company has something terribly new and exciting, but that, as one of the largest crane operators in the world, Manitowoc is highly, highly leveraged to the business cycle; when business is good, it’s very good.
Unfortunately, the company’s business was in tatters for much of the past couple of years, but that changed in the fourth quarter. Earnings, while still at low levels, beat estimates by a wide margin, and more importantly, Manitowoc’s backlog for its crane business soared 28% from the previous quarter. Combine that with optimistic words from the firm’s top brass on the conference call, and institutional investors took it as a sign the upturn had begun.
And so these big fish bought shares … a lot of them! MTW soared nearly 40% five weeks ago on volume that was more than triple average. Better yet, this move took the stock out of a nine-month basing formation -- really, the stock’s first major launching pad of the bull market. Put another way, MTW is not “overowned” by the institutional crowd or overly obvious to the retail crowd; if anything, we think many big fish will be trying to build positions over time, as it’s a relatively sure bet that this company’s earnings have bottomed and will head significantly higher in the quarters to come.
During the market’s recent bout of indigestion, MTW fell from nearly 22 to 18.5, but has held up well since, still meandering just south of 20. Shares might need a few more days or weeks to consolidate, but I think buying in this area, or on weakness into the 18 range, will work out over time. MTW is likely still in the early stages of a big-picture advance that should play out over months.