Tuesday, April 15, 2008

Manitowoc Trouble

One of my favorite stocks, Manitowoc (MTW) is getting slammed today following two downgrades. Yesterday, they agreed to buy food service company Enodis, who supplies products to McDonalds, among others. Wall Street didn't like the purchase. Manitowoc operates in three segments: cranes, food service products, and ship building/repair. The reason for their strong earnings growth has been the cranes, due to the large overseas demand. If they were just a crane company, Wall Street would like them much more. Management is looking to improve all aspects of the business, and Wall Street isn't interested. So, they get some bogus downgrades by analysts who don't like money spent on anything buy cranes. As an aside, who feels like they can trust any analyst at this point?

Manitowoc also took the time to re-affirm 2008 earnings targets as well, something almost no company can do right now. But the stock is getting hit hard by all the momentum traders and hedge funds who were just in it for the crane business. I'm sticking with the stock, and may add on further weakness.

Earnings with continue to be bumpy, especially when we hear from some more investment banks. I'm considering adding an ETF that shorts basic materials (SMN), because I think the agriculture sector has gotten overheated with speculation. Most people don't have the guts to short agriculture stocks, but that could be a reason to take a look.

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