For Aggressive Investors:
Graftech International |  - Co. Spotlights available via RSS feed
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This column is for investors willing to take more risk and potentially receive more reward. The stocks mentioned in this column are not recommended to buy or sell. They're brought to your attention so you can investigate them further to determine if they fit your risk profile. Most of the stocks will have less than $1 billion of market capitalization, have more volatility than other stocks, and oftentimes no earnings. And some will have tremendous stories. | | GTI | $7.41 | Why It's Featured: Solid earnings growth over last 5 years.
Danger Zones: Economic slowdown worldwide. | Forward P/E | 3 | | Earn. Growth | 42% | | Projected Sales Growth | 26% | | Market Cap. | $880M |
Continued from page 1... But wait, there's more: on September 5, Jefferies upgraded GTI to a Buy rating, pushing the stock to $18. Here's what the analyst from Jefferies had to say: Robert Schenosky stated that based on recent channel checks into steel mills, he believes the electrode industry is finally taking advantage of their oligopoly status, supply/demand balance, as well as, higher global steel production (benefiting demand).
"2009 pricing could show the single largest annual increase the company has realized," Schenosky said in a note to clients. He raised his price target on GrafTech to $30 from $22 and raised his 2009 earnings estimate to $3.25 from $2.10 a share, well above the current mean estimate of analysts. That was 6 weeks ago. Can the fortunes of the company have changed that much in such a short period? Probably not, but investors obviously are afraid of any stock (see general stock market meltdown) at this point, but they're also concerned about a global economic slowdown which will affect almost every company. Even if one division (electrodes) can raise prices, GTI has such a diverse product line that it won't be enough to compensate for weaker products. More numbers: Price to Sales is .81 while Price to Book is 1.81. Profit margin for the last 12 months was 14.66 with an Operating margin of 25.5%. Return on Equity was an outstanding (and astounding) 66.3%. Revenues for the last year were $1.13 billion. There's $13.56 million in cash and the Debt to Equity ratio is .35. Book Value is $4.25. The stock hit $27.98 on July 2 of this year then cratered to a low of $6.37 on October 16. Insiders own 4.4% of the stock. Institutions own 94% of it. There is no dividend. Earnings growth for the last 5 years has averaged 42% with analysts predicting 12% a year, on average, for the next 5. GTI is obviously out of favor for the moment. Whether it will bounce right back and climb to higher levels will depend first on how the earnings announcement goes, in particular management's assessment of future business, and second, how the global economies progress. It would be difficult to see earnings grow at the extraordinary rate they've shown in the last 5 years, but the company has demonstrated that it's selling products other companies want and/or need. That won't change. It just may take a little longer to see the kind of growth that gets investors' excited again. Company Web site: www.graftech.com - Ted Allrich |
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