Terex (TEX) received a key upgrade from BMO Capital Markets today and rose 10% in response. The stock has had a brutal month prior to the upgrade, falling some 30% over the last few weeks. Given Terex's valuation and growth prospects, the upgrade may have marked the bottom for this equity.
According to the business description from Yahoo Finance, "Terex Corporation manufactures capital goods machinery products worldwide. Its Aerial Work Platforms segment offers portable material lifts, portable aerial work platforms, trailer-mounted articulating booms and light towers, self-propelled articulating and telescopic booms, scissor lifts, telehandlers, and bridge inspection and utility equipment under the Terex and Genie brands."
Here are six reasons Terex is a long-term bargain at just over $18 a share:
- The company is still selling at just 93% of its book value, even after the rally today.
- The current stock price is substantially below its median analysts' price target of $30 a share held by the 17 analysts.
- The stock is selling at the bottom of its five-year valuation range based on P/B and P/S.
- In addition to BMO Capital, the stock has received upgrade or positive initiations from Robert W. Baird, BB&T Capital Markets, Longbow and Keybanc Capital Markets since the first of the year.
- The stock is selling at just over 6.5 times forward earnings, a substantial discount to its five-year average (22.8).
- The company has beat earnings estimates each of the last three quarters. In addition, consensus earnings estimates for both FY 2012 and FY 2013 have actually gone up over the past month while the stock was in free fall.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TEX over the next 72 hours.