Industrial cyclical upswings are a grand thing . if you're savvy enough to get in early. If you're like me, though, you're crying into your Diet Wild Cherry Pepsi when you punch up tickers like Manitowoc
That cold comfort aside, there's still plenty of joy surrounding Joy Global. Revenue climbed another 48% this quarter (after rising 35% last year) as sales of both underground and surface mining equipment exceeded 45%. While gross margins still improved over last year, the pace of the improvement slowed a bit as the company sold more new equipment relative to aftermarket equipment. Improvements in overall operating profits more than compensated, though, and the company saw operating income more than double.
The order book and backlog situation probably merits a little explanation. Overall bookings were up "just" 14%, and the backlog rose 4%. Couple that with an actual decline in underground equipment orders and some folks might get twitchy. I wouldn't worry about it yet -- orders for equipment can be lumpy from time to time. Furthermore, everybody's talking about opening new coal, iron, or copper mines, and if these mining companies are going to hit their production growth targets, they'll need new equipment.
There are plenty of small positives to play out here. Coal inventories are low today and companies like Peabody
The blessing and curse of being a value-oriented investor is a streak of stubbornness. You've got to be stubborn to buy (and hold) stocks that are unloved and you have to be stubborn in the face of high-flying stocks that just don't meet your criteria. So while I'm a huge fan of this company, I see myself more likely than not staying on the sidelines -- barring some correction/freak-out on the order of what we've seen in the oil drillers.
For more Foolish thoughts on the heavy gear:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).