For the past year, I have basically traded around this stock market with great success. At one point I was well ahead of the major averages. Much of that changed in early August, when I saw commodity prices crashing and equities in general as well. My favorite company in the entire market has been Foster Wheeler for quite some time. At $48, coming down from $85, it looked like a steal to me. I therefore began to buy on the way down. Little did I know that, like several other high quality stocks during the past few months, Foster Wheeler would not be spared the nasty deleveraging and overall panic out of stocks that has taken place since September.
At one point, FWLT reached $13.85, and the only way to keep my sanity was to laugh at the absurdity of the way the market was valuing the stock seeing as the company has very little debt and $9/share in cash! I could have easily panic sold, and still can, as the stock closed this week at $25.38. But the fact is that FWLT has done everything correct. They are valued at around a $3 Billion market cap even though their backlog is $8 billion. Their balance sheet is pristine and the management has been applying the share buyback program of $750,000,000 which is a sizeable portion of the company's value. The company also says it is in the process of signing off on eight mega-deals over the next several months.
In short, Foster Wheeler offers both amazing growth and value. To bet against Foster Wheeler now is to bet that the world will cease to grow--especially in cash rich regions like Asia and the Middle East--where many of the big energy infra projects are now.
It's been a painful ride, but I'm more confident than ever that I'll emerge in the next 1-3 years with a huge profit from FWLT.
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