Nuclear Fuel Powers BWX

03/14/2016 8:00 am EST


Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Our latest featured breakout stock is a firm that provides nuclear components, fuels, and assemblies to the United States government, explains Leo Fasciocco, editor of Ticker Tape Digest.

BWX Technologies (BWXT) makes precision naval nuclear components and reactors; close-tolerance and equipment for nuclear applications; and components for defense applications.

This segment also converts high-enriched uranium into low-enriched fuel for use in commercial reactors to generate electricity.

The firm provides uranium processing, environmental site restoration services, and management and operating services to support governments operating complex facilities.

It also makes commercial nuclear steam generators, pressure vessels, reactor components, heat exchangers, and other equipment.

BWXT's 12-month performance chart shows the stock appreciating 50% versus a 5% drop in the stock market. This move carried the stock to a new high, which is technically bullish.

The stock has formed a classic double-bottom base. The technical action is ideal. However, the earnings outlook is spotty.

That sets up a caution flag for the stock. As such, the stock is most suitable for aggressive investors.

On the positive side BWXT topped the consensus estimate the past two quarters. Net for the upcoming first quarter is expected to decline 27%; for the second quarter, net is expected to climb 16%.

Net for this year is expected to rise a modest 7% to $1.51 a share. Next year, Wall Street looks for an 11% rise. The stock sells with a p/e of 21.

The largest fund buyer recently was the 4-star rated T. Rowe Price Small Cap Stock Fund (OTCFX), which purchased 564,300 shares as a new position.

We are targeting BWXT for a move to $40 off this breakout. A protective stop can be placed near $31.

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