The name is as generic as it gets. What does General Cable do?
General Cable derives its revenues from a broad array of products and services, which helps it mitigate risk in various industry down-cycles and react to rapid changes in commodity prices. It offers copper, aluminum, and fiber optic wire and cable products worldwide. It services various industries from electric utilities to telecom and networkers. With the boom in energy prices, it has benefited from high margins in its refining, natural gas and oil extraction sales. It services these customers with a premium quality/priced product and very strong focus on customer service metrics, which is their differentiating factor. They benefited from the destruction of oil rigs following Katrina, the rapid expansion in oil exploration worldwide, the international construction boom, and the continual upgrading and return visits from satisfied customers in the various industries, including the highly regulated nuclear industry. Although it sounds like a bit of a commodities business, they invest heavily in Research and Development and include their customers in the development of their pipeline and pricing models to optimally focus on high profit margin product cycles. Think of them as the best in breed of this surprisingly important sector.
The fundamentals - Where from here?
The stock reached another all-time high today and has no signs of abatement. Worldwide demand continues to be strong and barring a global recession, or some sort of accounting irregularity, the stock's fundamentals are strong. The barrier to entry in this business are high due to the intellectual property and recurring business model. Additionally, General Cable has been an acquirer of competing firms in China and Canada of late. Their leadership is unlikely to be supplanted any time soon. Best in class service in concert with high customer satisfaction in an industry with constrained supply equals pricing power.
Following their prior earnings announcement in May, the stock rallied 12%. The details are listed below: