Blue Skies for BlackstoneShares of Blackstone (BX), one of the world's leading investment and advisory firms, have pulled themselves up from the abyss. They stood at 14.95 on Aug. 5, rising from a 52-week low of 3.55 in February. Analysts say Blackstone's vast financial capital and brain power almost assure it will seize opportunities in the global recovery.
"Like Goldman Sachs (GS) and Berkshire Hathaway (BRK.A), Blackstone performed better than its peers during the financial crisis and is uniquely positioned to succeed in this environment," says Karl Mills, manager of Counterpoint Select Fund (CPFSX), which owns shares. (The fund was ranked No. 1 out of 841 funds in the Lipper Large Cap Growth Equity category based on total return for the year ended June 30, 2009.) "We want to be invested in such shrewd and opportunistic buyers of prized assets at bargain prices," says Mills. He sees the stock at 20 in a year. Blackstone has over $90 billion under management and a $27 billion cash stash to fund new deals. Apart from providing M&A advice, Blackstone manages private equity, real estate, and proprietary hedge funds.
Marc Irizarry of Goldman Sachs (it has done banking for Blackstone) says the company's expertise in such areas as distress investing, dealmaking, and restructuring is its big allure to clients. He rates the stock a buy.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.A Driving Force in Solid-State DrivesSTEC (STEC), not exactly a prominent tech stock, may become one soon. Its shares, trading at just 3 back in December, rocketed to 33.59 on Aug.5. STEC makes low-cost and fast-access solid-state drives (SSDs) for enterprise storage and server systems. It also makes high-density flash memory modules for computer networking.
Its customers include IBM (IBM), Hewlett-Packard (HPQ), and Fujitsu. And STEC recently signed a $120 million contract to supply its ZeusIOPS disks to an enterprise-storage customer it won't name. "STEC's SSDs are apt to become the industry standard," says Graham Tanaka, president of top-performing Tanaka Growth Fund (TGFRX), which owns shares. The stock is up a lot, he says "but this is just the start of a two-to-four-year runup." Richard Kupele of Needham rates STEC, a client, a strong buy, based on its bright earnings outlook.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.Hitch a Rise on a Fast FreightRailroad stocks haven't been on a fast track, but analysts say some are picking up speed. One of them is FreightCar America (RAIL), which has bumped up to 18.76 a share from 14 in March. The company builds railcars to transport coal, vehicles, steel, and forest products. FreightCar is "a compelling long-term buy," says George Pickral of investment firm Stephens (it expects to do business with the company), who rates it overweight. Stephens forecasts the stock will hit 30 in a year. The downside risk is limited, he argues, because FreightCar has $13 a share in cash and its leases are worth $2 a share. Pickral expects FreightCar to earn 60 cents a share in 2009 and $1 in 2010.
Michael Gallo of investment firm CL King & Associates says FreightCar's strong balance sheet is helping it weather the current downturn. He rates the stock a strong buy.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
Marcial writes the Inside Wall Street column for BusinessWeek. In 2008, FT Press published the book Gene Marcial's 7 Commandments of Stock Investing.