Build Terex Into Your Portfolio - Barron's

Terex (TEX), the third largest construction equipment company in the world, manufactures cranes, mining equipment and aerial work platforms. Shares have fallen to $54 recently after reaching $96 in July on investor fears that infrastructure and construction companies will suffer due to a U.S. and possibly European downturn. Although a big customer recently announced it would be buying more aerial platforms this year, investors are worried.

Barron's thinks this stock is oversold: Some 65% of Terex's sales come from abroad, and its big growth markets are Asian, Russia, Eastern Europe and the Persian Gulf. A growing middle class there is increasing demand. Terex trades at 9.5 times 2007's profits, estimated at $5.67/share, and 8 times projected 2008 profits of $6.70. Other crane and mining equipment companies like Manitowoc (MTW) and Joy Global (JOYG) trade at 12.5 and 18.6 times 2008 earnings, respectively. A sale is also possible, says CEO Ron DeFeo as he nears his goal of $12 billion in sales and a 12% operating margin by 2010, or $9 in profits-per-share: "This company is for sale every day. I'm totally in this for shareholders." Streamlined operations, share buybacks and generally high returns on equity for investors make Barron's project an $80 stock this year, and $100 if a buyer bites.