Sunday, September 6, 2015

"Finally I get a chance to write about one of my 15 for 2015 stock picks. Oshkosh Corp. (Symbol OSK), which was already a great value stock, won a contract from the US. Army for $6.7 Billion dollars to build military vehicles"

Dow Jones Industrial Average 16,102.38 (Down) Week ending 09-03-2015

Oshkosh Corp. (Symbol OSK, $39.60) has always had great value fundamentals by my standards. A PEG Ratio of 0.83 and a Return on Equity of  15% were always good even though revenues had been declining for the last 4 years. It was one of my 15 for 2015 stock picks this year.

    Now that has all changed. August 25th, 2015 Oshkosh and Oshkosh Defense were awarded by the US Army a $6.7 Billion dollar contract to replace the military's aging fleet of Humvees with 17,000 Oshkosh JLTV vehicle. That amount is larger than its whole 2014 sales Revenue for the year! Add to that a 10 Million share stock buyback announced on Sept 1st and a possibility of another $50 Billion in contracts to replace the rest of the old Humvees and now you have a sweet 3-5 year story on a stock that already had pretty good fundamentals.

Some other good things about Oshkosh, the book value on the company is $25.57 a share so you are not paying much for the operations. Ben Graham and Warren Buffett would like the setup on this stock. Also the dividend on the stock is 1.72% so you get paid while you are waiting for your capital gain.

So lets look at some earnings information. 

The company is projecting 15% Annual earnings growth and should see that or better going forward. Earnings per share for 2015 are projected at $3.15 per share and for 2016 they are looking like $3.63 per share with a forward PE of 11.10 way below the market's current PE. (FYI, truck and auto stocks tend to trade at lower PE's in general when you a pricing them for valuation unless your name is Tesla.)

There is really good Insider buying on this one also. The future looks very bright here.
I purchased the stock around this price on Friday and you can buy it here with not to much downside risk. Even if we have another downside Tsunami in selling, this one should spring right back. China and interest rates will have no effect on the story here.

Enjoy your Labor Day weekend here in the USA. Everywhere else enjoy your regular weekend. Keep an eye out for bargains like this and leave comments with your own suggestions on my blog.


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