I have been watching all the coverage on Hurricane Sandy on television over the past few days and thinking about all my friends and colleagues in the Northeast. I am also jonesing from four days of not being able to trade. I have been thinking a good play on the storm damage could be General Cable (BGC).
General Cable Corporation manufactures and distributes copper, aluminum, and fiber optic wire and cable products for use in the energy, industrial, construction, specialty, and communications markets worldwide .
6 Reasons BGC looks like a good value play at under $30 a share:
- 34% of revenues come from sales to electric utilities and another 35% comes from other electrical infrastructure customers. With all the damage to the electrical infrastructure in the northeast, seems like a good place to be right now.
- The stock is selling near the bottom of its five year valuation range based on P/S, P/CF and P/B.
- The median price target by the six analysts that cover the stock is $36.50 a share, more than 20% above its current stock price.
- The stock is cheap at just 3% above book value and under 9.5x forward earnings, below its five year average (12.0). S&P also recently upgraded its credit outlook to "stable" from "negative".
- Earnings are expected to jump from this year's projected $2.43 to $3.15 a share in FY2013 and those projections were before Sandy.
- The company is now bigger measured by market capitalization than some S&P stocks making it a possible candidate to go into that index at some point in the future. In addition, revenue growth is poised to accelerate to 11% to 12% in FY2013 as the result of a recent acquisition.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BGC over the next 72 hours.