If I told you I know of a stock that's up 223% in the last year, and I think going to go up significantly more, you'd probably call me crazy. It's not Apple (APPL) or Baidu.com (BIDU), it's a company that has built momentum with more than winning a high-school election by popularity.
The company I'm referring to is GrafTech International Ltd. (NYSE:GTI), they manufacture a range of graphite electrodes, products essential to the production of electric arc furnace (EAF) steel, and various other ferrous and non-ferrous metals. GrafTech's history goes back to supplying arc carbons to the City of Cleveland, Ohio in the early 1900’s, to allow the city to become the first in the world with electric powered street lamps. They are a world leader in graphite material science with more than 120 years of experience in the carbon and graphite industry. GrafTech's products are manufactured on four continents and sold in more than 80 countries around the world.
The 52 week chart for GTI is a beautiful rise to the top, all the way from $6 to $19 a share:
No question, GrafTech has experienced some incredible growth in the last year and the Stockmasters think it's just the beginning. The reason why their stock has grown so much is their inept ability to beat earnings. Just look at their past year of earnings releases, they've beaten it every single time:
|
Earnings History
|
Sep-06 |
Dec-06 |
Mar-07 |
Jun-07 |
| EPS Est |
0.14 |
0.16 |
0.15 |
0.24 |
| EPS Actual |
0.15 |
0.21 |
0.27 |
0.37 |
| Difference |
0.01 |
0.05 |
0.12 |
0.13 |
| Surprise % |
7.1% |
31.2% |
80.0% |
54.2% |
Now, take a look at their earnings estimates:
|
Earnings Est
|
Current Qtr
Sep-07 |
Next Qtr
Dec-07 |
Current Year
Dec-07 |
Next Year
Dec-08 |
| Avg. Estimate |
0.27 |
0.30 |
1.21 |
1.41 |
| No. of Analysts |
3 |
3 |
3 |
3 |
| Low Estimate |
0.27 |
0.28 |
1.20 |
1.27 |
| High Estimate |
0.28 |
0.33 |
1.23 |
1.50 |
| Year Ago EPS |
0.15 |
0.21 |
0.57 |
1.21 |
GTI reported $.37 in June, and Analysts are only expecting $.30 in December! Think they will beat those estimates? You bet your ass they will. For December '08, Analysts are expecting $1.41 for the year. If they keep growing earnings at the current clip, they are going to make $1.75 to $2.00 without a problem.
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So bet the farm on GTI? No, we never recommend betting the farm on anything, diversification is the key. But we think the momentum GTI has right now should raise the share price to the $22.50 to $30 range if they can continue to beat earnings estimates.
As a side note, check out their Fuel Cell products that are found in 85% of fuel cell vehicles worldwide. Big growth opportunities for the future. I really like the momentum on this stock and it's justified and not blasted or hyped up by the company being mentioned on CNBC every other minute. GrafTech International has become a valuable security by doing what companies should do - beat earnings, sell great products, grow the business, and stand strong on a solid governing management team. These guys have got it all and with a P/E of 13.9 with shares trading at $19, it's worth the risk/reward ratio of picking up shares while they are chasing a new 52-week high.
Article written by:
Eric Cheshier
Article posted on:
October 11th, 2007
Disclaimer: The Author does NOT own any of the securities mentioned in this publication.
The Stockmasters Master Picks newsletter has been kicking ass and taking names for the past year. Our new publication comes out on Monday (10/15) and we'll be cashing out the following stocks for some easy and quick gains:
Activision, Inc. (ATVI) is up almost 20% since April 2007.
Service Corp. International (SCI) is up 43% since our first newsletter back in October 2006.
March 2007 we said buy Halliburton Company(HAL), it’s up more than 25% since then.
Blockbuster Inc. (BBI) has gone up 36% since we told you to buy back in June 2007.
The Masters don't play when it comes to their money our your's for that matter.
Our Original newsletter that has enlightened our our subscribers for over a year. It contains What to Buy, What to Sell, and Market Commentary. We've had impressive returns, great feedback, and in turn have already created a unique following of thousands of Stockmasters, on sale at WallStNewsletters.com. for only $45 a year. That's cheaper than a round of beers and an order of hot wings for your crew. Why not have more money in your pocket for beers and wings?
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