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Swan: When we see the ocean, we figure we're home. We're safe.
Luther: This time, you got it wrong.
Swan: Why'd you do it? Why'd you waste Cyrus?
Luther: No reason. I just like doing things like that.
Swan: You still looking for us?
Masai: [Looks at Luther] We've found what we're looking for.
Luther: [Cowering] No... It wasn't us. It was them. It was the Warriors.
Masai: You Warriors are good. Real Good.
Swan: The best.
Masai: The rest is ours.
[Swan nods his head in agreement as the Gramercy Riffs let the Warriors pass]
Luther: [as the Gramercy Riffs descend on the Rogues] Nooooooo!
And so goes the Legend of Cyrus, the deceased leader of the Gramercy Riffs. Justice was eventually served on Luther. But what of Cyrus?? Cyrus is D E D. But in memory of Cyrus and one of my favorite movies of all time, The Warriors, I bought Bucyrus today.
Today I bought Bucyrus (BUCY) at 65.58. I will sell it in 4 – 6 weeks at 75.54 Here’s why I like BUCY:
Well look at this chart for crying out loud. Is there absolutely any doubt in your mind that this stock is going to continue going up? This stock is up almost 600% from its 52 week low and its PE is only 16. When you look at the numbers, it is even more ridiculous. I’ll get to that later.
Bucyrus International, Inc. engages in the design and manufacture of mining equipment for the extraction of coal, copper, oil sands, iron ore, and other minerals in mining centers worldwide. They make all kinds of cool stuff that I used to play with when I was little. Draglines, Electric Mining shovels, and Rotary Blasthole drills are big machines that dig for coal and other good stuff that we need lots of. Some of the Bucyrus earth-movers are HUGE! Bigger than $$$MR. MARKET$$$’s guns. And they do not come cheap. To remove the huge heaps of soil and rock that cover coal deposits, customers use the dragline, which weighs 16 million pounds and costs $200 million.
Other major products include rotary blast-hole drills, which make holes and load explosives into mining areas. The explosives fracture the rock over the mine. Electric mining shovels then load coal, copper, iron and other "mineral-bearing materials" onto trucks.
In the U.S., coal production has slowed in part because of environmental concerns. Proposals for new coal-burning electric plants have run into regulatory roadblocks. Others have been shelved because of fears of new cap-and-trade rules. But in China and India, such concerns haven't slowed the headlong rush to coal to fuel industry and generate electricity. Coal is still strong internationally. More than half of Bucyrus' revenue comes from the international coal mining equipment market. Starting to get the picture, Einstein?? Developing nations are heavy users of other commodities as well. This includes the copper and iron that are also mined with Bucyrus equipment. And away we go….
In its Q3, Bucyrus topped ANAL-yst estimates for both sales and earnings. Sales rose 4.6% from a year ago to $675.8 million. Fully diluted earnings were reported at $1.21, up from 85 cents a year ago. Gross margins also rose, benefiting from increased production efficiency.
In the third quarter, the so-called aftermarket business, which includes service and replacements, accounted for just under half of all revenue. Aftermarket sales were strong in China, Chile and the Czech Republic.
Coal is black, but the only color that $$$MR. MARKET$$$ cares about is green. Revenues have grown each and every year since 2004 and have more than doubled since then to $2.6 billion. Over the same period, EBITDA has also grown each and every year and has quintupled to $523 million. BUCY’s backlog tells the whole story. The company’s order backlog has grown 1,272% since 2002 and is up to $1,937 MM at the end of the 3rd quarter. If they completely shut down their selling process, they’d still have almost $2 billion of sales orders to fill…wow!!
This is all a function of pent up demand, which is going to propel earnings of this company to the moon and we’re seeing some crazy numbers. Operating margin is 17.5%. Return on Assets is 12% (twelve percent?? In this economy?? For a large asset company???...how would you like it if your hard assets made 12%....you seees?). Oh yea, Return on Equity is a pornographic 27%.
So what do the ANAL-ysts think? They think sales will be $2.49 B next year with profits of $3.33 per share. Can these guys count?? Revenues 675 million last quarter. If you multiply this by 4 quarters, you get $2.7 billion. So these rocket scientists think sales will go down. Hmmmm. Similarly, they think earnings will slow down when last quarter’s earnings were $1.21 per share. Ok….what person on this planet actually thinks that we’re going to jump into another global recession next year?? I guess these ANAL-ysts do. What a bunch of maroons.
$$$MR. MARKET$$$’s econometric model predicts that revenues for 2010 will be $2.9 billion which will generate earnings of $4.58/share. At today’s PE of 16.6, this would translate to a share price of $76.03 which is right about where I will be selling this baby. Remember also, that the historical PE of BUCY is up around 25, so even with a little PE multiple expansion, its stock price has tremendous room to grow.
Global warming?? The rest of the world says ha ha ha ha ha ha ha. China continues to build new coal plants. And its use of electricity rebounded during the summer months. They need coal. Dig baby dig.
At the big conclave/street gang meeting, Cyrus, the boss of the street gang appears]
Cyrus: [yelling] Can you count, suckers? I say, the future is ours... if you can count!
[a couple of soldiers cheer for Cyrus]
Cyrus: Now, look what we have here before us. We got the Saracens sitting next to the Jones Street Boys. We've got the Moonrunners right by the Van Cortlandt Rangers. Nobody is wasting nobody. That... is a miracle. And miracles is the way things ought to be.
[Few more soldiers cheering for Cyrus]
Cyrus: You're standing right now with nine delegates from 100 gangs. And there's over a hundred more. That's 20,000 hardcore members. Forty-thousand, counting affiliates, and twenty-thousand more, not organized, but ready to fight: 60,000 soldiers! Now, there ain't but 20,000 police in the whole town. Can you dig it?
Gang Members: Yeah.
Cyrus: Can you dig it?
Gang Members: Yeah!
Cyrus: Can you dig it?
Gang Members: YEAH!
[shouting and Cheering]
Hope you liked this write up. If you end up making money on BUCY, please remember to check out www.dereksdreams.com.
I am HUGE!!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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