Buy Joy Global (JOYG)

07/21/2009 11:29 am EST


Jim Jubak

Founder and Editor,

I'm buying shares of mining equipment company Joy Global (JOYG) today on the strength of the good news from heavy equipment peer Caterpillar (CAT) in its second quarter earnngs report of July 21. Caterpillar significantly raised guidance for 2009, casting a strong voteĀ in favor of a bottom being in place for the global economy. I think thatĀ puts Joy Global's fiscal second quarter results, reported on June 3, seriously in need of an update. At that point, Joy Global announced that it had seen $161 million in cancelled orders for surface and underground mining equipment and projected that it could see another $300 million in cancellations. Revenue, likely to be in the range of $3.5 billion to $3.6 billion in fiscal 2009, could fall in 2010, the company projected, on risk in segments that the company defined as Russia, Canada's oil sands, iron ore, copper and metalurgical coal. Since then, rising commodity prices argue that the risks from iron ore and copper are way down and Caterpillar's results say that the whole sector is improving more quickly than expected. In my opinion Joy Global's June 3 report was a bottom for the company and the sector. I'm adding the shares to Jubak's Picks with a target price of $48 a share by June 2010. (Full disclosure: I will buy shares of Joy Global for my personal account three days after this "buy" is posted.)
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