Riding The Global Infrastructure Wave

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

The World Bank estimates that the world’s infrastructure spending — on everything from roads and rails to telephone lines, water and electricity generation — will total $369.1 billion from 2005 to 2010. In India alone, infrastructure investment is expected to rise to 9% of GDP by 2011.

Long known as the bargain basement of heavy-equipment makers, selling its mining trucks and rock crushers for low prices, this week’s Global Bull Market Alert pick, Terex Corp. (TEX), is profiting from the wave of infrastructure investments around the world. Terex’s specialty is the manufacture of equipment used in large commercial and government projects. All of that infrastructure spending requires hordes of big machines to dig, to lift and to flatten. As the world’s fastest-growing economies pour money into new ports, power plants, and pavement, demand for Terex machines have soared. Terex’s focus on mining equipment has also allowed the company to profit from the global commodities super cycle.

In the past, Terex’s machines had the reputation for lacking the sophistication of machines made by many other producers. That is no longer the case, as Terex has acquired companies that manufacture equipment renowned for top quality — charging premium prices. Senior management has also renewed its focus on integrating the various divisions to improve its negotiating position with suppliers.

Times are good at Westport, Conn.-based Terex. The company recently expanded its headquarters and moved into new offices. Sales last year reached $7.6 billion, up from $2.8 billion in 2002, thanks to a combination of two large acquisitions and strong organic growth. Today, Terex draws more than 60% of its sales outside North America. That percentage is only likely to grow as the company hits its goal of $12 billion in sales by 2010.

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Terex recently reported a net income of $113.8 million in the first quarter on $2 billion in sales, up 19% from a year ago. The prospects for the future also look good. Terex’s order backlog has soared to $3.4 billion, up 54%. Trading at a P/E of 12.75, the stock is a solid value.

So buy Terex (TEX) today, and place your stop at $69.50. For potentially even greater gains, I recommend the October $90 (TEXJR.X) options.


To make room for Terex, let’s close our position in Russia’s Vimpelcom (VIP) for gains of 13.17% (that’s over 105% annualized!) in the stock and 95.65% in the options. Four of our remaining positions — NII Holdings (NIHD), CVRD (RIO), Potash (POT) and Posco (PKX) — now boast double-digit percentage gains, with Posco up 30.75% since our initial recommendation. Move your stop in CVRD (RIO) to $39.50 and in Potash (POT) to $59.50.

P.S. Join me at the 29th Annual Money Show in San Francisco
I invite you to sign up for this year’s Money Show, July 26-28, 2007, at the San Francisco Marriott located in the heart of the city’s picturesque downtown. Join over 50 of the country’s premier policy analysts, advisors, and money managers who will share their best strategies for taking advantage of economic, political, and market opportunities to grow your investment assets. You can choose from over 150 educational workshops and 15 panel presentations. The show also features a state-of-the-art exhibit hall with more than 125 of the finest financial companies in the country displaying their cutting edge products and services. For complete details or to register for free admission, call 800.970.4355 (be sure to mention priority code #007384), or visit: The Money Show San Francisco’s Home Page

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