Foolish Forecast: What's in Your Pallet?

Cascade Corp. (NYSE: CAE) operates in the unglamorous business of providing products that serve the lift-truck industry. Learning the nuts and bolts of what assists forklifts in handling loads and pallets may not be your thing, but the company is currently being lifted by strong demand for its products in such far-flung places as Europe and China. Better yet, the stock has held strong in a volatile market, and investors will find out Thursday if second-quarter results will elevate Cascade to new heights.

What analysts say:

• Buy, sell, or waffle? Seven analysts currently follow Cascade; six are on the fence with hold ratings, while one analyst is bearish on the stock. The Motley Fool CAPS community currently gives the company a favorable five-star rating (out of five).
• Revenue. Analysts are projecting $134.9 million in second-quarter sales, or about 13% more than last year's second-quarter sales amount. 
• Earnings. Analysts expect quarterly earnings of $1.06, just more than 16% greater than last year's quarterly earnings.

What management says:
Cascade management tends to let the numbers speak for themselves, and in its first-quarter 10-Q filing with the SEC, it attributed recent favorable trends to the "general strength of lift truck markets globally, where shipments were up 9%." North American sales accounted for just more than half of quarterly sales and Europe accounted for another 30%, with Asia/Pacific and China making up the rest.

What management does:
Cascade is seeing much higher top-line growth overseas, while slower sales and earnings trends here at home have acted as only a slight drag on overall growth. As you can see below, profitability has stayed relatively smooth as Cascade continues to benefit from strong global demand for industrial, construction, and agricultural services, which just happens to drive sales for its lift truck products. (Oh, and if you're wondering about the sudden uptick in net margins at the tail end of the table, the jump largely reflects a one-time gain on an insurance settlement.)

Margin	01/06	04/06	07/06	10/06	01/07	04/07
Gross	32.1%	31.7%	31.7%	31.4%	31.3%	31.5%
Operating	15.3%	14.7%	14.9%	14.9%	15.0%	15.4%
Net	9.3%	9.0%	9.2%	9.3%	9.5%	11.7%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Cascade represents a small-cap opportunity to add exposure to favorable global industrial trends. Larger players who could benefit from this trend include Caterpillar (NYSE: CAT) and Deere (NYSE: DE), while firms such as Astec Industries (Nasdaq: ASTE) and Bucyrus International (Nasdaq: BUCY) also operate in the farm and construction machinery industry. Fools looking to lift their portfolio's returns should keep an eye out for Cascade's results on Thursday.

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