Fluor Corp. (FLR)

They are probably bottoming out here. This has always been a well regarded and well-run engineering company. It’s struggling with the reality that the emerging markets are in tough shape, the mining industry is in tough shape, and the energy business is also struggling. When the commodity and the global economy start to re-accelerate, this is the kind of company that will perform well. Dividend yield of about 1.8% while you wait. Doesn’t think you need to be there right now. It’ll probably be 2 years before you see a substantial, sustained recovery in large energy and mining projects.

It has underperformed because energy is one of their end markets. They have not seen any project cancellations, however. It is being unduly punished. She decided to stick with it. They restructured their operations.

The macro argument is that with the coming of the recovery in the US and eventually Canada, there will be a lot of money spent on infrastructure. Two others are JEC-N and SNC-T and to a lesser extent STN-T. He wants to see more of an improvement before jumping into them.

(A Top Pick June 3/14. Down 24.56%.) Engineering construction company. The reason for the decline is the pullback in crude oil prices. Half of their earnings come from the energy sector. Still likes.

53% of revenue comes from the oil sector where companies have cut Cap X spending. It’s the wrong space.

World’s largest construction/engineering company. The whole group has been under pressure and has not been doing too well. Within that group, he far prefers SNC Lavalin (SNC-T) because it has been hurt, not only by the global slowdown, but by the scandals which are now moving behind them, and he sees lots of good growth for them. He would look at SNC as one that has lagged and will outperform. Getting a lot of good contracts.

(A Top Pick May 6/14. Down 20.06%.) An engineering construction company based out of the US. Energy is one of their end segments and this is why it has come off. A global company and very well respected. Only about 37% of their client base is in the US. If you have a longer-term view, which she does, they will ride this out.

Has been hit by the energy downturn. He does like it. In that particular space, he feels it is far and above anybody else. You have the cream of the crop in this, and if you have it, Hold it.

This is an interesting area. Has been beaten up a lot with a lot of exposure to the energy space. You don’t need to be involved in this area at all. Expects there will be a lot of continued pressure on spending for a significant period of time.

This has been unfairly punished because of its exposure to energy. Within the E&C and construction space, this would be one of his preferred names. It has one of the most experienced management teams that can invest and construct large complex LNG, oil and gas, petcom (?) projects. The petcom (?) Industry is the one area where he thinks there is growth coming in 2017-2018. Right now there are expected to be 2 or 3 large ones to be built in the southern US, and this company is one of the largest and leading construction companies in this space. The price is not expensive, but in the short term there is near-term risk if oil continues to get cut back.

He is happy with it. It is the cream of the crop. It has come off because of the fear that energy related projects will be cancelled or postponed. Long term this is the place to be, however. The strong US dollar will harm any company with foreign business, but he understands they do some hedging.

Stock has come off with declining energy prices. They will be reporting later this month and there might be some pullback. She is willing to wait and see what they have to say. Of all the companies in the energy/construction space, this is the one that she likes to own as they are the best well-managed and well diversified.

They’ve all been really hurt here. There is no support and resistance on a one year chart. They have been hit by energy exposure, but they are not really all that affected by the oil price. So he would pick away at these.

Not currently buying this. You want to see stabilization. A lot of their clients are big major international companies, so they are really thinking longer-term. She doesn’t think $40-$50 crude is going to be here for a number of years. When these companies make their plans, they are years out and typically don’t see a lot of cancellations or deferrals. Waiting for the next quarter in order to gauge what they see out there.

The whole group has been doing poorly. He owns SNC-T. FLR-N is in a world of its own. Biggest concentration of work in the energy area, so the most vulnerable.