General Cable Plugged Into Growth

Once a good growth story gets going, you just never know how strong it'll ultimately be.

Take the case of General Cable (NYSE: BGC). This stock is hardly well-known among the general public, but since its lows last May, it has gone on to be a triple. And the really big projects in power transmission and reliability improvement have not yet begun.

Reported revenue growth came in at 45% for the first quarter, though that's a bit misleading because much of that came from acquisitions and the soaring prices of aluminum and copper. On an organic basis, that also adjusts for metal prices, revenue growth was a more subdued (yet still solid) 10%. All the same, more business is leading to more efficient use of assets and positive operating leverage -- to the tune of 74% growth in operating income.

All in all, General Cable's volume grew by more than 25% this quarter, using the poundage of metal sold as a proxy for volume. Growth was strongest in the energy business, with 16% organic revenue growth and 27% more pounds sold, but the industrial segment made a solid showing as well with 8% organic growth and nearly 33% growth in pounds sold.

Strong as this is, it should get even better. For players in the power space like ABB (NYSE: ABB) and Siemens (NYSE: SI), the solid order growth is just beginning, and as General Cable's management mentioned, utilities like TXU (NYSE: TXU) and FPLGroup (NYSE: FPL) are talking about building up generation and distribution facilities. And you know all those new coal-fired plants we hear about? They'll need cables, too.

As a one-year triple might suggest, these shares are not exactly in the bargain bin these days. By the same token, an ongoing rebuild of the power infrastructure suggests that they're not really dramatically overvalued, either. The high price of copper and aluminum certainly adds volatility and uncertainty here, but I wouldn't pull the plug on this idea just yet.

For more electrifying Foolishness:

• General Cable Has the Power
• Can American Semiconductor Break Loose?
• FPL's 42,000-Megawatt Merger

TXU is a Motley Fool Income Investor recommendation. Let Mathew Emmert show you how to get paid to invest.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).