Bucyrus Int'l Could Be a Goldmine (BUCY)

Bucyrus International, Inc. (BUCY) engages in the design, manufacture, and marketing of draglines, electric mining shovels, and rotary blasthole drills used for surface mining. It also supplies replacement parts and service for such machines. The company’s equipment is used to mine coal, iron ore, copper, oil sands, molybdenum, phosphate, bauxite, gold and diamonds, and other minerals. (Y! Finance)

Catalysts that make BUCY a buy:

* For 2006, the Department of Atmospheric Science at the Colorado State University anticipates 17 named storms in the Atlantic Basin from June 1 to November 30, of which nine are expected to grow into hurricanes. This will boost oil prices, further pushing governments to think about searching and identifying new oil sources. This will increase the demand for drilling and, in turn, the CAPEX by oil companies to drill. Finally, this leads to a margin expansion for BUCY.

* Over the past three years, the company has increased gross profits by improving manufacturing overhead variances, achieving productivity gains and expanding its high-margin aftermarket parts and services business. Demand for the company's OEM machines is driven in large part by the prices of certain commodities, such as copper, coal, oil and iron ore. The prices of these commodities have risen in recent periods.

* BUCY's revenues have been growing due to strong sales of aftermarket parts and services in addition to mid-teens growth in new machinery sales. Margins expanded again, operating income rose 58% and EBITDA climbed 52%.

* Revenues have grown from $337 million to $575 million or so from 2003 to 2005. The bottom line is even more compelling, from a loss of 3.5 million in 2003 to a after-tax profit of $53 million in 2005. EBITDA has almost grown by 400% in the past two years. Long term debt has decreased substantially since 2003, now around 67 million from 153 million in 2003, down more than 51% in two years.

* BUCY is flying under Wall Street's radar. The analysts that cover it have a hold rating on it leaving plenty of room for upgrades. With the strong demand for commodities, BUCY will beat estimates, like it did last time, with a surprise of 52% in EPS.

BUCY 2-yr chart:

Disclosure: I don't own this stock.