DGBruno

Why Chicago Bridge & Iron Is Cheap

You indicated that you like companies that, in a crisis, don't have to open new lines of credit or get debt financing. Given the industry that CBI is in, aren't all of their customers wed to the debt markets to finance their projects? Large infrastructure companies are only cutting back on capital spending expectations. All people talk about these days is the deleveraging of businesses and consumers - I think that will negatively affect CBI in the near term and possibly over the longer term, regardless of their balance sheet strength. Their balance sheet strength and access to credit may allow them to weather the storm, but I doubt it means they are undervalued. Much like with the airplane manufacturers, you will see that backlog start to disappear. Lastly, their margins are looking very thin relative to last year. Don't underestimate the market's ability to accurately price assets.