This should be a very interesting scenario... with the final decision regarding the LMT protest, stock buyback for 4th qtr...
I'm thinking this really should have a nice run. $55-$60+ I would think is certainly possible during 1st qtr of 2016.
The events in Paris were horrific and it helps bring us together to fight one common enemy. The reality of it is, all the bombing in the world won't eliminate the necessity of a ground war to root out the final strongholds. Who make the best vehicle that can withstand that environment while being able to withstand the inevitable IEDs? OSK!
The more time it takes, the more spectacular the breakout will be... We could actually see $55 within a few days of the breakout...Let's not forget this stock has a potential target price of $80 or more when fully valued with JLTV weel under way.
Their earnings are at a low point however. JLG is at a trough. Defense will be much stronger in 2016 and 2017 is when JLTV kicks in. Fire and Commericial are almost irrelevant. Unless the commodities market gets even worse - you are buying OSK at a low point. Pretty safe bet. And there balance sheet is clean finally. They have the ability to buy back shares or buy more accretive firms. Hard not to like this stock at these levels.
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PE 15 or 13, we're in the same ballpark on the price. Did I miss a different deal? "30G$ mega order". Sounds even better. I haven't followed too closely therefore I probably shouldn't be in the stock, but I thought same about lockheed a few years back, sold, and it is where it is today. So looking at OSK, I have the same feelings towards it when it comes to large government orders, epecially on the defense side. The stock looks properly priced, but I'm with you on a further outlook. Another upside is that OSK is small enough for a reasonable buyout from LMT or perhaps UTX. Maybe even GD, but not so sure about that as the Force Protection purchase didn't seem to be a big money maker in the end.
I would add to your discussion by saying PE of 15 x 3$ is more like the actual fair value WITHOUT the JLTV contract... If you want to try tp put a value for the next 7 years, based on intrinsic value (present value) then 10% of the planned 30G$ mega order is a reasonable assumption. This would put OSK closer to $80 stock price... Sure we have to wait for the stock price to catch up...but it's worthwhile :)
I purchased for a long position after the 6 bil deal was announced thinking that this will be another bottomless pit for the US Govt. Although this is most likely true, the earnings were hideous given the stock price. Even at the low end of 3.00 a share guided for 2016, I think the shares are only worth 39 bucks using a low teen multiple. On one hand i should sell just based on this. However, I think more money will be on the way from other governments, especially from the oil rich middle east players involved in endless war.
The other bottomless pit I'm considering is NOC, Northrup Grumman. While a tad on the expensive side relative to earnings at this time, the new mission to bring on a B3 is the epitome of a money vacuum. In addition to a high initial price tag, a project like this will have dump trucks full of money from the tax payer for cost overruns.
And to get political, all the defense stocks are rocking under the current administration. The good news is what we all know. The only ones who spend more than democrats are republicans! Money in our pockets. Thanks Uncle Sam!
Wow - great call, Glass! Thanks, Glass. Now what? Well, we will hit $50 before we hit $36. Mostly driven by Defense news
Bad earnings coming due to downturn in commercial division (Access) and no news on defense contract = bad week coming. The only event that will pop this stock will be the dropping of lockeed protest and/or buyout rumors. Management is not a strongpoint of this company. Products are stong but mismanaged.
Well, my point was that the Saudi and Iraqi armies may need replacement vehicles. But like you say these replacements may come from US military motor pools as opposed to fresh from the factory. Meanwhile, the Kurds as well use these vehicles...
If LiveLeak digital files can be believed, OSK vehicles are going up in smoke on daily basis in places like Ramadi and the sands and broken terrain of Yemen. So presumably new ones will be ordered...
This is the beginning of a new LONG upward trend ... There is mention on the 30G$ contrats in the Barbarian at the Gate article... Imagine when people find out !
Who will be the lucky buyout candidate ?
First come first serve ... unless more than one buyer come's in...
Envoy the ride my friends...
5G$ is more likely ... LMT and other Defense contractors are probably kicking tires... JLTV is unique once in a lifetime mega contract that everyone wants to hit ...
Long until $60
Would you really sellout to LMT at the current PPS???? I would want to see a bid of at least $5 Billion before they get my shares :)
yes, with Market Cap under 3 bil, would be possible for sure. But 30 bil contract does not necessarily mean BIG net income. But Gov contracts always seem to lead to further income opportunities.