Speaking with Analyst James Lucas about Industrial Equipment recently, he gave us his five companies to look at in this space. The industrial equipment space may be doing poorly this year, but be sure to look to these companies to see just when it’ll turn around:

Mr. Lucas: There are a number of different data points to track. Companies like Grainger (GWW) and Fastenal (FAST) in the distribution space provide their sales data and watching those month-to-month trends gives an indication of what’s going on because they tend to be MRO-related products, so it’s more of the day-to-day handling within a business. Kennametal (KMT) in the machine tools space, Illinois Tool Works (ITW), which tends to be little bit more consumer and commercial related, and Emerson (EMR), which gives you some network power, technology, and is very heavy on the process oil and gas side, also give their monthly numbers. When you take those five, it gives you a pretty good cross-section of the overall economy to get an idea of what’s going on out there.

For the full Industrial Equipment report, including the full interview with Mr. Lucas, as well as interviews with top CEOs in this space, click here.

In our recent Industrial Equipment Report we spoke with Daniel Whang of B. Riley & Co., Inc. who was very high on Regal-Beloit:

“Regal-Beloit (RBC).is a leading manufacturer of electric motors, motion control products, and generators. They have a strong brand. One of the things that I like about them is that they have significant exposure to early cycle demand. Roughly about 40% of their revenue is coming from resi­dential, what they call HVAC or Heating, Ventilation, and Air- Conditioning motors. As the economy starts to bottom out and show improvement, I think they could be one of the early beneficiaries of that. In the industry, they have a reputation of producing high qual­ity products. They have a management team with a good track re­cord. In the current environment, the company is reducing their costs while they continue to invest in the business.”

Mr. Whang also recommends another Industrial Equipment company but you need to read the full interview for that information which is available here .

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Obama administration hurting the economy ?

In a recent interview John Collopy of Briggs-Ficks Securities, LLC for our Industrial Equipment report Mr. Collopy when asked about how the new administration was impacting the sector he said “That’s a problem. I am very concerned about their overall economic policies. They have flooded the system with liquidity that I don’t know if much, any, some, or none of it is going to spill into the fundamentals of the economy at this point. I am afraid these policies might dampen multiples going forward because people are going to be leery of govern­ment interventions that could impact investor sentiment and I think that’s what one has to be very careful of.”

Problem , Concerned,  Afraid these are words that are never associated with recovery. Is the Obama administration off the mark or has Mr . Collopy missed the boat? Read the full Industrial Equipment Report and you let us know. follow and respond at twitter.com/wstranscript

As part of our June 29 Industrial Equipment Report we spoke with Karl S. Puehringer of Baldwin Technology Company, Inc. (BLD). The complete interview can be read at twitter.com/wstranscript

When asked about the companies sales mix Mr. Puehringer stated  “I’ll give you a quick overview of our current sales mix. More than 50% of our sales during our last fiscal quarter were re­curring revenues derived from consumables, service, parts and our U.S. food blends operation, and consequently, less than 50% of our revenue during Q3 FY09 came from equipment. By region, 26% of our revenues are in the Americas. Our largest region is Europe, which accounts for slightly less than half of our business, and the second largest region is Asia with Japan being the other most im­portant country for Baldwin. The geographic balance in sales is a major strength of Baldwin. “

The complete text of our interview is available through our Twitter portal at twitter.com/wstranscript. Make sure to check back with our Twitter for more exclusive content, commentary and issue updates

In our interview with analyst Jason Seidl of Dahlman Rose & Co., we spoke a little about the current state of the companies in the railroad space. According to him things are getting worse, not better, and all because of coal:

 Mr. Seidl: If you look year to date, carloadings are down almost 18.5%. If you look quarter to date, they’re down almost 23%. It is a significant falloff, but, again, I’m pointing at the fact that it actually hasn’t gotten better, in fact it’s gotten a little worse. I think the reason for that is that coal is rolling over. Coal has gone from being down just over 5% in the first quarter to down nearly 18% thus far in the second quarter.

There are two main reasons for coal being under so much pressure right now, a drastic decline in exports and sluggish domestic demand. You have the lack of an export market, which is driven by coal prices and demand. Indeed, we are currently out of the money compared to South African coal. On the demand front, it is fairly obvious what has happened to the steel industry in Europe and this has been weighing heavily on demand for metallurgical exports to Europe. While China has started to import some coal, it is only on the margin.Looking at the domestic utility market, we find that demand is not much better. If you look at the burn levels for a lot of the utilities in the first quarter, we were down over 3%. While 3% may not sound like much, it is actually quite severe for a utility market.

For the complete interview with Mr. Seidl, including a full overview of the Railroad space and stock picks, click here. 

As part of our special focus on Investing in Utilities in the latest issue of TWST, we spoke with analyst Marc De Croisset of Macquarie Capital (USA) Inc. Mr. De Croisset told us one name that has been looked over by investors but presents a good investment is Portland General Electric (POR). We asked him to tell us a little bit about it, and why it’s been overlooked by investors:

Mr. De Croisset: It’s a puzzle to me [as to why investors are not interested]. There is some litigation overhang, which we think has more bark than bite. There is some volatility in the earnings stream due to the structure of the fuel recovery mechanism. The utility is also regionally focused. This may scare some people away as it leaves POR in a no man’s land of investor risk appetite. We view this as an opportunity and not a liability. POR just got left behind…POR issued equity in the first quarter. We don’t expect another equity issuance for some time. The rate base growth of that story is very significant, and I’m hard pressed to understand why it’s trading at such a deep discount to book value.

For the complete Investing in Utilities issue, including a full interview with Mr. De Croisset as well as interviews with additional analysts and CEOs of top companies in the space, click here.

In our last issue, one of our special focuses was on Investing in Utilities. We spoke with analyst Heike Doerr of Janney Montgomery Scott, who told us which companies she was recommending in this space and why:

• Calfornia Water Service Group (CWT)- “This California utility has been the first to benefit from the state’s improving regulatory environment. The utility received a favorable rate increase in July 2008 that has been producing solid earnings, and the company has implemented favorable regulatory mechanisms that minimize the impact that purchased water costs and conservation efforts have on earnings.”
• Artesian Resources (ARTNA)- “Artesian has done a good job of navigating the Delaware housing slowdown by expanding its regulated franchise into Maryland, growing its wastewater business, and increasing its non-regulated capabilities through a handful of small acquisitions during 2008.”

For the complete Investing in Utilities report, including a full interview with Ms. Doerr, as well as other analysts and top CEOS in this space, click here.

 We talked with analyst Richard Tortoriello of Standard & Poor’s Financial Services regarding the Aerospace & Defense space in the recent issue of TWST. Here’s what he had to say about how events in the last few years have shaped the current status of the airline industry:

Mr. Tortoriello: …Airlines were getting hit in 2008 and 2007 with soaring fuel prices, so they had to respond to that. They began taking planes out of service last year before anyone was really screaming about a recession. Now they’re a little ahead of the game, and I think that means that some of the worst pain has hit us already. Not that things are going to get better fast, but that there probably aren’t going to be a lot more planes coming out of service and the airlines have probably de-stocked their inventory of aftermarket parts to some extent, and they’re going to have to start ordering a little more.

For the complete Aerospace & Defense report, including a roundtable discussion, and interviews with top CEOs in the space, click here.

In our special focus this week on Residential Construction, we spoke with David Goldberg of UBS, who relayed told us a little bit about when he thought the Residential Construction market would bottom out:

Mr. Goldberg: The first thing I’ll tell you is, I think we are getting closer to the bottom of the cycle. We’ve been saying for some time that we think the fourth quarter 2009 will be the trough in housing. We really look at both price and sales pace. From a sales pace perspective, which a lot of folks are looking at now, I probably agree that it is not going to go down dramatically from here. We have to get some price stability and that’s not going to happen until we start to see supply let up and we just don’t believe that that’s going to happen until the end of this year. So with that in mind, we think we are probably six to eight months away from the trough in housing.

For the complete Residential Construction report, including the full interview with Mr. Goldberg, including stock picks, and an outlook for investors, click here.

In our special focus on Airlines this week, we spoke to analyst Helen Becker, who talked us a little bit about her outlook for the airline space:

Ms. Becker: We are expecting the first quarter to be horrible. We are expecting major losses in the first quarter for the industry. We are not expecting it to be quite as bad as what IATA is looking for, which is a $5 billion loss for the industry for 2009. But certainly we are expecting a first quarter loss to be in the $700 million range, under $1 billion, from operations.

Though this prediction may sound sanguine, Ms. Becker is in fact being optimistic, in her own way. As she mentions, the International Air Transporation Association (IATA) predicted late last year a $5 billion loss for airlines in 2008, followed by a $1 billion loss in 2009. Becker’s prediction of only a $700 million loss is optimistic, given the dark picture for airlines in general.

For the complete Transportation report, including a complete interview with Ms. Becker giving her full outlook for 2009 and stock picks, click here.